Sell the note in pieces... it's the very best way to maximize the cash payout.
Houston, TX (PRWEB) December 31, 2013
National note investment firms receive numerous inquiries from private note holders on a daily basis. By following these tips, a mortgage holder will maximize their cash buyout options and command the attention from potential note buyers in order to achieve their financial objectives, according to Nicholas di Caro, Senior VP for DICARO & ASSOCIATES, LLC.
1. Always ask about note purchase contingencies. After a mortgage holder receives written offers from a company they feel comfortable with, they should carefully read the purchase agreement and ask the investment company precisely what would cause the original offer to change. If a company says that the offer is “guaranteed”, the seller should proceed with caution. As the old saying goes, “nothing is guaranteed except death and taxes”. The bottom line is that until the documents are reviewed, credit is approved, the real estate value is appraised, and the title is clear, then no reputable note buyer can guarantee any funding amount.
2. Sell the note in pieces. The very best way to maximize the total cash payout is for the mortgage holder to only sell a few years of the total payments and retain the last few years of payments for themselves. This is commonly known as a “partial purchase” or a “partial note sale”. Good things come to those who wait. If a note holder can achieve their cash objectives simply by selling part of their payment stream, then they will maximize their total cash received in the long run. This is a common practice and over 70% of DICARO & ASSOCIATES, LLC purchases are structured as partial purchases.
3. Don’t sell to any company if credit is available. If the note holder has the ability to borrow money in the form of a home equity line of credit (HELOC) or if they have the ability to borrow money at any rate of interest below 10%, then it will be in their best interest to do so. The reason is because only AAA rated notes or A+ notes will receive pricing in the 9%-10% yield range. So in effect, if the mortgage note holder sells at a 10% yield to an investor, but has the ability to borrow the money they need at 7%, then they are effectively overpaying in the form of a discount on the sale of their note equivalent to a 3% difference.
Nicholas di Caro is the Senior Investment Partner for DICARO & ASSOCIATES, LLC. Operating in all 50 states from their Chicago, Illinois location, they invest in performing and non-performing real estate notes from $5,000 to $5,000,000. They are actively buying privately held mortgage notes, deeds of trust, and land contracts secured by single family residences, mobile homes with land, and commercial properties. They have the ability to buy notes that other companies have denied, in addition to providing creative purchase options that are new to the industry. Learn more at http://www.nicholasdicaro.com