A cookie Cutter approach to Use "paper"

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Posted by Michasel Morrongiello on October 22, 2006 at 18:18:28:

In Reply to: Ideas for Converting my Strategy posted by Chris Hackett on October 22, 2006 at 14:38:08:

Chris:
I like you concise analysis...and it actually can get better than you have outlined. Buying, fixing, selling, and then forgeting and moving on the next deal become infinitely more feasible to do when you use "paper" as both a marketing tool and financing tool to move your inventory.

1) Buy home for $200K

2) Do some improvements, upgrades, renovations, etc. (if necessary)

3) Sell home for $245K with owner financing provided to the buyer and the "right" structure or terms of the sale (typically 5% cash down from the buyer, fully amortized fixed rate financing offerred with an interest rate commensurate with their credit profile and scores - anywhere from a suggested low of 7.5% to 10%)

4) Seasoned the Note 1-3 months and document the payment history coming in

5) Move through the owner financed "paper" by selling the Note and realizing a discounted cash pay price (typically in the 92% +/- range or $225K for the $245K Note instrument)

6) Move on and do the next deal.....

The above simplified process is real, does work, and is a process or scenario we've (Sunvest) been invovled in for well over 20+ years. The KEY is to understand that you must be meticulous in your paperwork and your selection of appropriate buyers. With minimal cash down payments of 5% or such one should strive to have a 600+ credit score buyer. Lesser credit score buyers will result in larger discounts or more seasoning of the owner financed "paper" before it can be readily converted into a lump cash sum.

Best to your success,
Michael Morrongiello
www.sunvestinc.com

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