Chris,
Yes this is the concept and you are right on. The only thing you want to consider is the fact that this works best doing it retail.
If you are hunting properties that need work and are trying to flip to investors that rehab, you will have a problem with the apprasials. Most Note buyers do not like to buy Notes on properties that need a lot of work. If they do they will hold the After repair value amount listed on the apprasial when it is funded. And most of them will hold 1 and a half times the amount.
If you have any other questions contact me, I can walk you through it.
From what I’ve learned on this site there are several ways to finance a deal and one way is discounted notes. I just wanted some advice to see if I’m getting this right.
Here is how I envision the process working.
Locate a good deal and get under contract.
Wholesale or re-sell as owner financed.
After finding a buyer and agreeing on a sale price I would work with a note broker to create a new note for that amount.
Set up a double closing and at closing the buyer signs to repay the note which I sell to the note company for cash. The cash is used to pay off the original seller I’m buying from and closing costs. I keep whatever is left over.
Am I getting this right? Where can I find more details on how to set up deals like this?
Chris:
You have the concept down correctly. This program works best when selling the home to an Ultimate Owner Occupant type buyer who intends on buying the home as their primary dwelling.
However there are also some pitfalls when trying to sell a home where a large (greater than 25% ) run up in value takes place on paper over a short time frame or in this case at the same time you acquire the home.