Do some of you create notes to purchase/sell a property, rather than use private/hard money? Do you do this on a consistant basis. What are the advantages or dis-advantages. This is really great stuff I have been learning!!! Thanks to all for your answers to my questions… on and off this board!
Thanks for your time.
Todd Williamson
Hey Thanks guys! good stuff. I have been reading a little more and found some other great info too!! This is pretty exciting, I have some things brewing already.
Todd
Todd:
If you are buying properties to renovate and the keep as rentals - Short Term so called “hard money” can be VERY expensive money…
WHY…?
Well the money is not long term financing so it will have to be refinanced
The interest rates are typically VERY high 13%, 15%, 18 % or as we use to say; “Pensacola Prime” for the cost of the funds.
There usually are points and a prepayment penalty to contend with
Whereas;
If you can get a property seller to agree to Finance you from the get go with a long term seller financed Mortgage & Note (up to 360 months or 30 years) with terms that allow your deals to make sense…
The interest rate can be structure to be FAR more favorable
The financing can be LONG TERM not short term
There is no prepayment penalty requirement
You can now effectively hold on to this property and rent it out and not be concerned about a pending balloon payment.
You save the additional expenses and costs associated with havinv to refinance and pay off the short term hard money lender / loan.
Just a few subtle nuances or differences to consider…