Note fliping with 500k+ houses - Posted by breeves

Posted by Craig on April 26, 1999 at 12:12:08:

I think you might also take into account the price of the homes. A half million dollar home will take some time to market no matter if it’s seller financed or not. I do these deals with median priced homes in my area and it takes an average of about 60 days to have it resold and closed. It would probably take 6 months for a home worth $500,000. Plus your talking about a $50,000 down payment. That’s a heck of alot of cash to come up with. Even people with good enough incomes to pay for the loan can’t come up with that kind of cash to put down. In reality unless you can buy any home for no more than 82% of Appraised Value the deal will not work, and even with that number you will have to negotiate with the seller and buyer to handle some closing costs or your up front profit will be eaten away by them. To summarize, the guy that pitched this idea to you did not explain the smaller details of these deals and it would be in your interest to find out if he’s done any deals himself with the numbers he has given you and ask him for documented proof before landing yourself in a contract to buy a $500,000 home with no escape except non performance on your end.

Note fliping with 500k+ houses - Posted by breeves

Posted by breeves on April 24, 1999 at 08:02:07:

I have received some info and had a few phone conversations with “No Banks Required” based in Atlanta on the technique of creating Jumbo Notes and working with FSBOs to create a note and flip to owner/occupant. Has anyone worked with this company or completed any deals that have a similar structure to the one outlined below. The company says a lot of investors work this angle to create seconds for a good passive income. Thanks for all feedback.

My Purchase Price 435,000
Owner/Occupant Purch Price 500,000

Note created by seller at 85% of Sale Price 425,000

Note sold by seller at closing at 92% 391,000
Buyer down payment 50,000

Cash avail to Seller 441,000
Cash required by Seller 435,000
Cash to me 6,000

Second given by me to buyer 25,000

Re: Note fliping with 500k+ houses - Posted by SCook85

Posted by SCook85 on April 25, 1999 at 01:59:16:

This is a typical note transaction except for 92% of a “conforming” note (85/5/10) is low if your buyer has reasonable credit. You are also not taking into consideration closing costs for this transaction. You have a sale between the seller and you, then another sale between you and the buyer, then a third transaction in which you sell your note. These transactions do not get done for free. On a deal of that size you need to know who is responsible for the costs before going in.
Good luck with it.