Posted by Michael Morrongiello on March 13, 2002 at 23:05:38:
Ernie:
There is hardly enough space here in this forum to cover detailed answers for all of your questions, so I will provide a real concise response… To a degree you also have sort of answered your own question as the prospective payors credit profile and credit scores will have a profound impact on the optiumim deal structure.
- Which is best to offer note buyers Mortgage,Land Contract?
A- Mortgages are easier to simply assign as opposed to having to deal with deed transfers, potential deed transfer expenses, etc. - However either instrument is fine.
- 85/10/5 or 80/10/10 - typically the more down payment the better. However with strong enough credit you can structure your deals with as little as 5% cash down and 95% seller financing!
3.Which will get me the most cash - the deal which has the better credit payor.
4.Would these be more attractive with a balloon ?
Most Note funders (including ourselves prefer NO balloon payment and fully amortized Note up to no more than 30 year (360 month) term.
- 3 or 5 year balloons? - addressed above
6.Would I get better results putting several properties in a package? - This question needs to be clarrified? Do you mean ONE mortgage secured by several properties, or selling a small POOL of seperate mortgages?
7.Will I have buyers if I offer notes that are 10% interest - YES, and with decent payor credit you can dip down to as low as 9.25% +/- on the Note interest rate…
- If buyers pay first six months payments at close will this increase the value of the note?
- Actually this is NOT advised at all. Collecting 6 months worth of advance payments tells little about how the payor will ACTUALLY pay on the Note.
To your success,
Michael Morrongiello