Need Help... - Posted by Kokoliley

Posted by David Butler on April 01, 2006 at 15:21:44:

Hello Kokoliley,

Best way to create a note deal that stands up legally is to sell the property to an end-user in an arm’s length transaction, and carry back a note for part of the purchase price. The property buyer (Payor) makes the payments to you, or whomever you eventually sell the note to.

But… what you are describing here sounds essentially like a loan transaction. Generally speaking, you’ll find that “hard money” lenders are generally the funding source for the circumstances you describe above.

But the place to start is with your local lenders, beginning with your own bank. If your own bank is not willing to help you, be sure to find out why they won’t - and also ask them for referrals to possible lenders. Their answers to these questions will give you a clearer and faster route to move forward on.

BTW… you might want to post this up in the Real Estate Financing Forum, along with mentioning where you are located.

http://www.creonline.com/real-estate-financing/wwwboard6/index.html

That will improve your odds of getting a response that might be more relevant for you with regard to your geographic location so far as possible lenders might be available for you.

Hope that helps, and best wishes for your success!

David P. Butler

Need Help… - Posted by Kokoliley

Posted by Kokoliley on April 01, 2006 at 14:13:32:

We own a property worth 750k. We are looking to raise 250k to rehab the property (expand it from 4bd/3ba to 6bd/5.5ba). On completion, property will be worth $1.3m. What would be the best way to create the note (deal)?

HELOC, Refinancing, or Share Appreciation Note - Posted by Michael Morrongiello

Posted by Michael Morrongiello on April 02, 2006 at 18:27:49:

Koko;
I assume you are intent on SELLING the home after the renovations are completed for the $1.3M FMV…

You also did not mention what type of existing equity you have in the $750K home at this time. Assuming that you do have some real equity, a straight forward HELOC - home equity line of credit or a refinancing of your existing financing with the $250K cash out should provide you with the funds to enable you to renovate and upgrade the home.

If you are tapped out equity wise, then another possibile alternative is to borrorw the $250,000.00 in funds from a private investor who might advance you these funds and then note charge you interest but a % percentage share of the growth or appreciation in the property after it is sold that will result from the upgrades, renovations being completed.

Funds from someones ROTH or other IRA account would be very suitable for this…

Hope this helps.

Michael Morrongiello