notes versus private money - Posted by Todd

Real Estate Investing Real Estate Financing
#1

Posted by Jason (AL) on April 23, 2007 at 18:43:11:

…but here is a comparison of the 2, found in How To Make Money With Real Estate & Paper booklet that comes with Michael’s course:

Discounted Paper | Hard Money Loans

Track Record: Yes | No

Equity Build-Up: Yes | No

Prop. Appreciation: Yes | No

Low interest rates: Probably | Market

High yields: Market | Market

Cash invested: 35-70% | up to 105%

Availability: Less | Yes

Profitability: Yes | Market

Usury Laws: No | Yes

Guarantor parties: Signers+sellers | Signers

Properties secure note: Often 2 | One

Payors used to making Yes | Not yet
payments:

Maybe this’ll help ya.
Hope you enjoy.
I know I do.

Later.

#2

notes versus private money - Posted by Todd

Posted by Todd on April 21, 2007 at 12:24:01:

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

#3

Thank you - Posted by Todd

Posted by Todd on April 25, 2007 at 08:33:24:

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

#4

Seller financed note Vs Hard money - Posted by Michael Morrongiello

Posted by Michael Morrongiello on April 23, 2007 at 19:24:24:

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…?

  1. Well the money is not long term financing so it will have to be refinanced

  2. The interest rates are typically VERY high 13%, 15%, 18 % or as we use to say; “Pensacola Prime” for the cost of the funds.

  3. 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…

  1. The interest rate can be structure to be FAR more favorable

  2. The financing can be LONG TERM not short term

  3. There is no prepayment penalty requirement

  4. You can now effectively hold on to this property and rent it out and not be concerned about a pending balloon payment.

  5. 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…

Best to your success;
Michael Morrongiello