1. The home buyer may plan to live in the home for only short time and may sell the home before the balloon payment comes due.  In this scenario, you (as the home seller) would receive the balloon payment plus any remaining loan balance when the buyer resells the property.

2. The home buyer may refinance the remaining portion of the note, including the balloon payment.  Often, buyers may become eligible for more traditional bank loans after owning the property for a time and demonstrating a good payment history.  In this situation, the home buyer would refinance the home and pay you the balloon payment plus any remaining loan balance from the funds from their new (refinanced) loan.  Of course, you may also elect to refinance the balloon payment for them, perhaps at an increased interest rate and/or payment amount.

3. The home buyer may pay off the balloon payment (to you) in cash. 

If you collecting payments on a mortgage or trust deed which includes a balloon payment, you may still elect to sell all or part of the note if you find yourself in need of a large sum of cash.  You have several options available:

• You may elect to sell all of the payments and keep the balloon payment.

• You may elect to sell the balloon payment and keep the monthly payments.

• You may elect to sell part of the both the monthly payments and/or the balloon payment.

(Please contact us if you would like to discuss any of the above options.)

If the mortgage you are holding does include balloon payment, make sure to remind your payor of the balloon payment well in advance of the payment date, in order to give the payor time to make arrangements to pay the balloon payment.

Buildable lots which are located in prime residential areas will provide the best pricing.  These lots are usually 5 acres or less, are legally platted lots with a legal description, and feature full utilities to the lot line (including electric, telephone, water, sewer, and possibly cable).  These lots will also feature paved public roads to the lot line.  Buildable lots may be subdivision lots, urban lots or second home properties.  For buildable lots, a down-payment of 10-20% with a term around 10 years is preferred, although notes with terms less than 20 years may be viable.  Balloons (if used) should be less than 70% of the original note balance.

Improved lots are similar to buildable lots but are located in more rural areas or outlying resort areas.  They may be developed as resort or second home properties.  These lots are generally 15 acres or less and should be "improved" with at least 3 of the following features:  structures, well or other water supply, paved road access, septic or sewer system, telephone, and/or a desirable view.  There may also be a recorded plat map of the lot.  This category also includes working farms of less than 15 acres.  If the property is a working farm, crops are often included as an "improvement".  To be considered sellable, these notes should have at least 20-30% equity in the property and a balloon of no more than 70% of the original note value (if a balloon is included).

The third category, unimproved land, usually includes 15 acres of land or more.  As the name implies, there will likely be no "improvements" to the land (i.e. no electricity, telephone, water, sewer, paved road access, etc).  In order for these notes to be marketable, a down-payment of 30-50% is preferred.  Terms less than 20 years will be considered, and balloons (if part of the mortgage or trust deed) should be less than 55% of the original note value.

The final category is commercial/industrial land.  Pricing for these types of notes will be dependent on the recent history of the property and its viability for its intended use.  Information about zoning, current usage, demographics, and local economics will be important in evaluating this type of note.  Land zoned for light retail and commercial properties are likely to be more valuable than land zoned for light industrial activity. 

If you are collecting payments on a land note, First Class Cash Flow Handlers will buy that note from you.  Please feel free to contact us or call us at (401)-258-7158.

Cash flow notes (both mortgages and trust deeds) secured by commercial real estate can be sold for cash.  Their value will be determined by factors such as the value of the securing property, the payor's credit rating, and the individual terms of the note.  Other factors, such as the amount of seasoning, the amount of equity in the property and the payment history will also affect the value of the note.

In general, a down-payment of 25% on a commercial property is preferred, although notes with down-payments of 10-15% may be considered under some circumstances.  Credit scores above 640 are preferred as well, although scores of 600 or more will definitely be marketable.  Although simultaneous closings (selling the note directly after the sale of the property) are sometimes done, seasoning the note for 4-6 months is more common.  Seasoning for 12 months or longer will make the note even more valuable and help offset other weaknesses, such as a low down-payment.   

Additionally, other information about the property will be necessary in determining the note value as well.  Whether the property is owner-occupied or tenant-occupied will be a factor.  Owner-occupied properties will be more secure and thus more valuable.  If the property boasts multiple tenants, the vacancy factor can affect the value of the note also.  The annual gross rental income for the property, as well as the annual operating expenses must also be taken into account.  Likewise, the net operating expense (NOI) will need to be calculated and accounted for.  (The NOI is the net revenue of the property after all expenses except the debt service on any mortgages have been subtracted.)  The debt coverage ratio will factor into the note's value as well. 

Other factors which need to be evaluated are items such as the zoning of the property, the current usage of the property, and the allowable uses in the classification of the property.  For some properties, whether the zoning is "grandfathered" and whether the current usage is taking advantage of some kind of variance will have an effect on the value of the note as well.

If you are currently holding a commercial real estate note which you would like to sell, please go here to submit your note, or call us at 401-258-7158.

Alternatively, you may need cash to cover the cost of medical expenses, or pay off credit card debt.  You may wish to take a vacation or buy a home or a car, or even a business and need money to fund this ambition.  You may need money to fund a college education for yourself, your spouse or your child.  You may need to fund your retirement.  Or you may have the opportunity to place the money in a higher-yielding investment.  Basically, any time you need cash, you can sell all or part of your cash flow note to raise that cash.    Whatever the reason, your cash flow note is a good source of capital.

Another reason for electing to sell a cash flow note is to eliminate the need to worry about whether the payor is going to able to make next months payment or not.  You may not want to deal with the mechanics of maintaining a cash flow note.  Or you may be worried about the note defaulting.  By selling the note, these concerns are alleviated.

There are many good reasons for selling a cash flow.  Only you can decide whether selling is right for your individual situation.  If you would like to discuss whether selling your note is your best option, please contact us here or call us at (401)-258-7158.

You may be under the impression, as many people are, that any buyer who cannot qualify for a traditional bank loan is an unsafe risk.  The truth is that lending requirements for traditional lending solutions (banks and mortgage brokers) are very rigid and many qualified buyers simply cannot qualify even if they are able to afford the payments on your home and they have an adequate down-payment.  Traditional lenders tend to shy away from buyers with recent life changes, such as a divorce, a recent relocation, or a recent job change.  Offering owner financing to sell your home or property will actually make it easier for buyers to purchase your home and therefore will attract a larger number of qualified buyers to your home.

The second misconception surrounding owner financing is that the seller is trapped into receiving small monthly payments for their home.  This also is not true.  The mortgage or trust deed that is created when you sell your home is a liquid asset that you can sell any time you need cash.  By selling your home using owner financing and then selling the resulting mortgage/trust deed at closing, you can accomplish an all-cash sale of your home.

Let's now look at some of the benefits of owner financing.  We've already discussed the fact that you'll attract a larger number of qualified buyers and can accomplish an all-cash deal.  However, there are a number of other benefits also.

Because offering owner financing to your prospective buyers is a valuable commodity, you will be able to receive top dollar for your home or property.  Unless your home is in need of major repairs, you should easily be able to collect fair market value for it.

Most properties tend to sell much more quickly with owner financing than with traditional lending solutions.  Closing on a property can take place within days after a sales agreement is reached.  Closing costs are also much lower, with no points or garbage fees.

Owner financing can be used to sell any type of property: single-family homes, multi-family homes, condominiums, town-houses, duplexes, apartment complexes and other types of commercial properties.  Even businesses can be sold with owner financing.  If your property is difficult to sell or non-conforming, owner financing may provide a much more successful method of selling.  If bank funding is not available for your property, owner financing may be your only alternative to selling your home.

Tax advantages also accompany the use of owner financing when the taxable gains are extended over time.

In summary, owner financing allows a quick sale at top dollar with the opportunity for an all-cash deal when you sell your home.      

First Class Cash Flow Handlers buys and sells privately held mortgages, trust deeds, and other cash flow notes.  If you are selling a home, you need to know How To Sell Your Home Fast In Good Or Bad Markets.  For more information, visit us at our home page or call us at 401-258-7158.

When you are injured in an accident or become ill because of the actions of another party, litigation can drag on for long periods of time.  It is not unusual for a case to take years to make it's way through the court system.  In the meantime, you need to have enough money to pay your expenses and bills.  This can be difficult if you are unable to work, have a reduced income, or have expenses associated with medical care.  This is where pre-settlement funding can be of assistance.  Pre-settlement funding can free you from having to accept inadequate or pre-mature settlements because of a lack of income.

Pre-settlement funding is actually a non-recourse cash advance made to you.  In return, you promise to repay the advance and associated fees after your lawsuit settles, or after a court victory.  This type of funding is not a loan.  The cash advance and fees are repayable only after your case is resolved and only if it is resolved in your favor.  You repay nothing if your case is lost. 

Because of the fees involved with pre-settlement funding, you should carefully consider all of your options before you decide to accept a pre-settlement funding offer.  In some cases, a personal loan or other funding alternative may be more cost effective for you.  However, pre-settlement funding is preferable to being forced to accept an award that is much lower than what you deserve.  With pre-settlement funding, you'll no longer be at the mercy of the person or company that injured you, or their insurance company, simply because of a lack of funds.  For more information, contact us.      

Mobile home notes are similar to other real estate notes in that they are cash flow notes and are a liquid asset which can be sold for cash.  However, they also differ from real estate notes in several ways that you should  be aware of if you are planning on selling your mobile home and taking back a note on it.  Firstly, mobile home notes can seldom be sold on creation of the note.  Though four months seasoning may be acceptable in some circumstances, twelve months is generally preferred.  What this means for you, as the holder of a mobile home note, is that you will need to hold that note for at least one year (and receive monthly payments on it) before you can receive a lump sum of cash in exchange for the monthly payments.

Unlike real estate notes, the market for selling a second mortgage on a mobile home is small and the note must be very desirable to be considered.  Try to make sure your note is in first position when it is created.  In addition, terms less than ten years on the note are preferred.  Statistics have shown that notes with terms more than ten years (especially those between 10 and 20 years) have a higher default rate.

Mobile homes may be located in a mobile home park or on land.  If the home is located in a park, the rating of the park will affect the resell value of mobile home note.  The higher the park is rated, the more valuable the note will be.  Mobile homes notes on homes located in parks with a rating of less than 3 stars will be difficult to sell.  In addition, mobile homes notes on homes located on land which is leased or not fully owned will be difficult to sell, whereas mobile homes located on land which is part of the security for the note will make the note more valuable.

The value of a mobile home is generally acquired through a resource known as the NADA guide.  It is important to make certain that the sales price for the mobile home is not significantly higher than the NADA book-value, unless you can validate the sales price with an appraisal.  

As with privately-held real estate mortgages, the interest rate on a mobile home note will affect the resell value of the note.  Under no circumstances should the interest rate go above 16%.  Additionally, balloon payments are generally not acceptable, unless a well documented exit strategy can be verified.  Down-payments of 10% or more of the sales price are preferred.  As with real estate notes, the value of a mobile home note will be affected by the amount of equity in the home.

In summary, mobile home notes can and quite often are sold for cash, much like real estate notes.  However, there are a number of differences between real estate notes and mobile home notes that must be taken into account when creating, buying or selling a mobile home note.  

First Class Cash Flow Handlers buys and sells privately held mortgages, trust deeds, mobile home notes and other cash flow notes.  For more information, visit us at our home page or call us at 401-258-7158.