With the struggling economy and failing banks the need for seller financing and note buyers is on the rise.
In our 40+ combined years working with real estate notes, we haven’t seen demand this high since the 80’s.
Everyday our office is contacted by property owners, investors, and note brokers asking how to make owner financing and the note business work for them. We’d like to share this overview of the industry along with helpful resources for learning more about the paper business.
What is The Note Industry?
Each day goods are bought and sold on credit through traditional bank financing. But did you realize that billions of dollars in debt financing also takes place in the private arena, outside of traditional bank markets?
When an individual or privately owned company sells property and allows the purchaser to make payments over time, rather than obtaining a traditional bank loan, it is commonly referred to as a private note, seller financing, an owner carry-back, or private paper.
A seller might be willing to finance property for a variety of reasons. Perhaps the buyer or the property has difficulties qualifying for traditional bank financing, the seller desires long term interest income, or the seller plans to maximize the selling price by offering easy terms. The seller now holds a note and is entitled to a future payment stream.
Selling Private Mortgage Notes
There is also a lucrative secondary market for the purchase of privately held debt.
The seller may prefer a lump sum of cash now rather than payments over time. They can sell or assign the right to receive all or a portion of the future payments to an investor.
The investor researches the transaction, known as due diligence, and once satisfied pays the seller cash in exchange for future payments. The investor also pays a referral fee to any note finder, consultant, or note broker.
This creates numerous moneymaking opportunities, including the following:
- Earn thousands in referral fees by matching sellers with investors
- Purchase notes for interest income
- Negotiate to buy notes at a discount for double or even triple digit yields
- Offer owner financing to sell properties you own
- Buy property with seller financing at favorable terms
- Access self-directed retirement fund for tax-deferred or tax-free investing
- And the list goes on…
Learning the Note Business
The note industry is a legitimate business that provides a useful service and the opportunity to make money. But like all businesses it takes hard work and know-how. Unlike some may claim, there is no path to overnight riches!
Our goal is to separate the myths from reality when it comes to seller financing and private mortgage notes.
There are simple truths surrounding owner-financed notes that should be revealed. Too many people leave money on the table through lack of knowledge. Worse yet, others prey on their lack of information.
Whether a note seller, buyer, broker, investor, real estate agent, or cash flow consultant, we can all benefit from knowledge and straightforward answers.
At Diversified Investment Services, Inc. we purchase notes secured by property within the State of Florida. We also provide training and resources for the note business based on two decades of individual experience. If you would like to learn more we invite you to visit Note Industry Resources and NoteInvestor.com!
To Your Success,