| You can purchase property for cash, of course, | | | | total payments of $2,400 per month (Be sure |
| and if you have it, this can be the best way to | | | | you still have cash flow). As part of the offer, |
| get a great price. What if you don't have the | | | | you arranged for the sale of the second note at |
| cash? Here are some of you other options. | | | | closing for $45,000. That's all a note investor is |
| Partner To Purchase Property | | | | likely to pay for an "unseasoned note". The seller |
| Join the local real estate investing group in your | | | | gets $45,000 in cash, and payments of $2,000 |
| town. Then start taking notes, names, and | | | | every month for 30 years. The note investor |
| numbers. Our group here in Tucson meets once a | | | | gets your other payment of $400/month. |
| month. The best part of the meeting is the "I | | | | The numbers will be all different in every deal of |
| have / I want" part, where anyone can stand up | | | | this sort. Maybe you have some cash. Maybe the |
| and tell the rest what they are looking for, or | | | | seller needs more cash, so the second note will |
| what they have to sell. I have a list of people | | | | have to be for a higher amount. Interest rates, |
| now that are looking for everything from mobile | | | | balloons, and your credit rating all affect what a |
| home parks to fixer-upper homes. | | | | note buyer will pay for the note too. The point is |
| How do you use this information to purchase | | | | that you can create cash out of seller financing, |
| property? Here is one of several ways: Make an | | | | meaning you can purchase property with nothing |
| offer on a property, and include in the offer the | | | | down, or with less down. |
| right to assign to someone else or bring in a | | | | No-Doc Loans |
| partner. Call the people on your list until you find | | | | These loans used to be harder to find, and may |
| one that will put up the down payment or arrange | | | | still be in your area, but they're everywhere |
| financing as a partner. | | | | around here right now. The idea is that you don't |
| I announced that I had some money at one | | | | need documentation of a job or even income, |
| meeting, and three days later got a call from a | | | | hence the name "no-doc." The bank loans based |
| couple that had the financing and down payment | | | | on your credit score and the property. I can get |
| on a project arranged, but needed a partner to | | | | 95% financing on a $300,000 house without any |
| bring in the money to rehab the property. If the | | | | job or income right now. |
| deal is good, you can find the money. If you don't | | | | The catch, apart from needing either great credit |
| have a real estate investors group nearby? Start | | | | or a larger down payment, is that the interest |
| one. | | | | rate will be higher. Now, suppose you find a |
| The Two-Note Technique | | | | $100,000 fixer-upper and can put the $5,000 |
| This creative way to purchase property sounds | | | | down payment and the repairs on your credit |
| more complex than it is. You make an offer for, | | | | cards. In this case, the few thousand in interest |
| let's say, $360,000 on a rental property, when the | | | | over the six months you own the house isn't |
| seller is asking only $350,000. Why, if the seller is | | | | much if you intend to make a $25,000 profit. |
| asking $355,000 and probably only expects to get | | | | On the other hand, the higher interest will really |
| $340,000, do you offer more than the asking | | | | add up if you are going to live in the house for 30 |
| price? Because the seller will be financing the | | | | years. At the moment, the banks around here |
| whole deal, and he needs cash, so you'll be selling | | | | seem to want about 2% more for these loans |
| one of the loan notes. Let me explain. | | | | than for conventional mortgage loans, and that is |
| You offer two mortgage notes, one for | | | | a lot of extra interest over the years. Bottom |
| $300,000, and the other for $60,000. The | | | | line? No one way is right in all cases. That's why |
| payments on the first might be around $2,000, | | | | you need to know many ways to purchase |
| and $400 per month on the second. You'll have | | | | property. |