Joe was a hard charger who'd had a heart attack and wanted to retire. I'd been leasing his 3 free and clear houses with a ten-year Option to buy for 4 years. I had 6 more years left on the original 10 year term and really didn't want to terminate what had turned out to be a pretty good deal; so we negotiated.
Continue reading “Wrapping a Loan From the Inside to Increase Yield”
Article I Section 10 of the United States Constitution says: 'No State shall ... pass any Bill of Attainder, ex post facto law, or law impairing the Obligations of Contracts . . .'
Promissory Notes are simply contracts between a lender and a borrower. Mortgage Notes are forms of the same kind of contract which are secured by a Mortgage instrument. Contract law binds them both and any disputes between borrower and lender are usually settled in Equity Courts. From time to time, lenders seek to impose limitations and restrictions upon borrowers that have the net effect of forcing borrowers to either renegotiate existing loans or to borrow new money under conditions more favorable to the lender.
There are other practical uses for mortgage debt that go beyond simple financing arrangements. Sharing property ownership interests is one of them. When two unrelated owners wish to join together in the ownership of a property without entering into a formal legal arrangement or running the risks of an implied or ostensible partnership being deemed, a mortgage is an excellent way to arrange this, and to divide both title interests and profits.
Continue reading “Using Mortgages to Divide Property Interests”
An almost invisible profit is generated anytime that capital owned by others can be used at low cost. The most obvious example of this would be where I borrowed your vacation home, then rented it out to others. Taking this a step further out of public glare, I might rent it from you at below-market rents, then rent it at market. Or, I might buy an Option, then re-sell the Option at a profit. Or, I could do both of the above. In any event, I'd be using your capital rather than mine. Let's extend this concept a little:
Every MLS book contains thousands of dollars by-passed by agents who are focused solely, upon their commissions. Where? In the 'sold' listings that show the loans which encumber properties, including both conventional and private financing. This can be a ready source of cash for those who understand what happens.
Dick was an up and coming executive who had bought a large, attractive home in an upscale subdivision. He had put $45,000 of his savings down to reduce his payments, wiping out the bulk of his cash savings. Then he was downsized and couldn’t make his payments. Over the years, I have established a reputation for solving financial problems, so he called me.
It's natural for the fledgling investor to rely upon institutional lenders for mortgage money with which to buy houses. Banks and mortgage loans abound in good times. Lenders besiege investors with offerings of attractive loans at low interest rates. All people have to do is to arrange a loan or line of credit secured by their personal residence or other assets, then go out and find a house to buy. The problems with this is two-fold:
Continue reading “Private Money Financing – A Better Way to Go”
You'd be surprised at how much you can get simply by asking. I'm not talking in the context of negotiation so much as in the context of making an offer to buy a property from a motivated seller.
How can you tell a seller is motivated? By making a low offer - over and over again. When you make an offer and the seller doesn't respond, that's a pretty sure indication that you won't be able to make a good deal, and you might want to pass on to another buyer. That statement might not be true in a sellers' market, but it is in a buyers' market such as we have in most areas today.
Continue reading “Finding Motivated Sellers To Make Better Deals”
Betty Jo was a recently divorced go-go girl who was just about gone-gone. She'd set her sights on living in a swinging singles apartment house in order to find a new mate. Her present house represented more of an obstacle than an asset in her quest, but she needed the equity to be able to afford the rent for the apartment.
Woody's daughter wanted to go into business, so he bought a large house and converted it into funky retail space. The problem was that neither the public - nor after a short time his daughter - was much interested in funky retail merchandise. So the store stayed empty and abandoned for 4 years.
