The concept of note brokering, or converting a stream of
payments, secured by a mortgage, to up-front cash can be
done with discounted notes.
The main reason why an owner of a property will sell with
owner financing is to earn more money on their money. The
most common reason is when a buyer can not qualify for
traditional financing. The benefit to the seller is that
they can often get a higher rate of return on his/her money.
Another option is that a seller can have a buyer qualify
for a traditional first mortgage on part of the sales
amount, and then offer to take back a second mortgage to
cover the balance. This often lets the seller get a higher
price for his property, while letting the buyer still
qualify for a mortgage.
If an owner sells a property with owner financing the owner
is basically considered the mortgage company. But what
happens if the seller who is holding a note and collecting
monthly payments from his buyer decides that he/she wants
to now use the money for something else, some other
investment or financial need, or simply decides that
collecting payments is not all that fun? Often times they
want to sell the note.
Some note-owners have no idea that they can get cash for
their note (discounted of course) or they do not know where
to start. As a note broker your job is to introduce note
buyers and note sellers and collect a fee for your service.
Popular ways to find those holding mortgages is to
1) Run a classified ad (in the Real Estate Services section
of your newspaper) looking for note holders or
2) Direct mail or
3) The World Wide Web.
Use the public records of recorded mortgages to find those
who are carrying a note. Since all mortgages and trust
deeds are filed in the county clerk's office this
information is available to the public. Next, where do you
find buyers for these notes? The same way actually; use
ads, direct mail, and the web.
Lastly, the internet has made research in general and this
whole process even easier now than ever before. You can
simply type note holder or note buyer or note broker into
your favorite search engine. Look through the results, read
and find out how each of their programs work. You can find
buyers, find sellers and of course make sure you know how
you (as the note broker) will get paid when you broker a
successful deal.
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Chris Parks is a Real Estate Investor who has been involved
in Real Estate in one capacity or another since the mid
1980s. As a member of a small group of Real Estate
Investors & Entrepreneurs, and always having the knack for
explaining Real Estate Basics in an easy to understand
manner, Chris created REI for Newbies in order to teach &
assist new Real Estate Investors in a step-by-step,
easy-to-understand manner. http://www.REIforNewbies.com
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