I am a real estate investor. I buy houses, fix and flip them and sometimes carry the note...
Q: Will you buy this type of Note?
A: Nope. I am not interested in buying "flipper" notes. 5 years ago, there
where about 8-9 other note buying companies that loved to buy these "flipper"
deals.
The usual scenario in this type of "flipper" deal is as follows:
1. Investor buys house at foreclosure or tax sale for $20,000.
2. Investor paints house and puts new front door on.
3. Investor re-sells house for $130,000 to person with a "good" credit score but
has no job or no income.
4. Sale of house is usually a nothing down transaction.
5. Investor now tries to sell the seller financed note to a note buyer.
6. Note buyer buys the note for $100,000.
7. Person who bought the house (payor on the note) defaults after 1 payment to
Note buyer.
8. Note buyer has to foreclose.
9. House only worth about $40,000.
All of the note buying companies that used to buy this type of "flipper" note deals
are no longer in business.
I don't buy this type of note on this type of scenario.
Labels: note flipper deals, note investor, seller financing note deals
posted by Tom @ Red Phone Funding @ 10:16 AM
2 Comments
2 Comments:
Tom
If you followed the above strategy but you seasoned the note with an owner who had a job and made timely payments for a substantial period of time would you be interested in that kind of note?
Bobby
Tampa, FL
Sure.
I guess the question is, "what's a substantial period?"
The other big concern - what is the property really worth today?
Any note buyer is always looking at the worst case scenario. Which would be the payor defaults.
Now the note holder must foreclose.
After the foreclosure (which can take between 2 months and 4 years...) now the property must me resold.
So current property value is always a big part of the note buying equation.
So the simply answer to your question is "yes."
The reality is more info is needed...
Post a Comment
<< Home