Re: my owner created mortgages - Posted by David Butler
Posted by David Butler on December 01, 2000 at 15:11:33:
JohnBoy is right… owner financing is just one more tool in your dealmaking kit, and it should only be used when it BEST meets the NEEDS and objectives of the parties, as opposed to alternative financing structures.
Seller carryback financing tends to run in the inverse of the economic cycles affecting institutional lending markets - during “easy money” cycles, such as those we have been through these past six years, private paper originations tend to contract. This was particularly so with the emergence of the high LTV subprime markets that exploded during this last “easy money” cycle. However, the recent hemmorraging in the subprime markets has helped to set the stage for an increasingly “tight money” cycle to begin developing again.
During “tight money” cycles, private paper tends to have a strong resurgence… an event that looks like it has already begun to reemerge. And I will have to disagree with JohnBoy on one minor point… even during this past “easy money” cycle, there have been numerous instances where alternative financing options did not meet the NEEDS of the deal participants, either in the subprime, or the conventional lending markets. This is particularly so when either the buyer, the seller, or both, are investors… which brings a whole other layer of financing strategies to the bargaining table.
Certainly, owner financing should be looked at in every transaction… but only on its merits in facilitating that transaction. You may find it helpful to have a look at several recent posts I made in the Cash Flow Forum, at:
and, more particularly,
Creating Notes for Max Resale
This last one will provide you with the link to a very important FREE report directly related to your objectives, with regard to NOTE GRADING/PRICING GUIDELINES.
Hope this helps, and best wishes for your success!
David P. Butler