Cash Flow Note Traders and Note Sellers – This Financial Angle Is Awesome For Investors Of Real Estate Notes

February 28, 2012 | Author: | Posted in Finance/Real Estate

When conducting affairs in real estate, many items are created in the form of real estate cash flow notes and land contracts. These instruments are used in a plethera of ways that can benefit both the creator of the note as well as the purchaser.

These RE notes and land contracts are formed when the seller carries back a specific portion of the sales price. A critical rate of interest is laid out for financial gain and the terms can be varied with respect to length of the term, if there will be a balloon payment, and so forth.

When an investor is thinking about obtaining these notes, they desire a nice high interest rate, some specific seasoning on the financial note, that money was put down at the kickoff of the real estate note, and many other factors. For alot of these investors, these pieces of financial paper can give a great monthly income that is vastly above any interest rate you can receive in a financial institution. These notes also give flexibleness in that they can unload the note at a profit at any time they want. Compare that to a CD that has a far less interest rate and you are locked in for the term of this CD whatever that may be.

When an investor is desiring to liquidate one of these instruments, many times it is because they want to actualize liquidity for a different investment potential they have their eye on. Or perhaps they are wanting a bigger rate of return on another instrument. Some investors manipulate these instruments as down payments on other real estate. Whatever the case may be, there is plenty to be said concerning the easy selling and creation of these marvelous financial contracts.

If one decides to invest in real estate instruments, they have to do their due diligence. A clear understanding of every area of the note must be thought about. Due diligence must be done to confirm every specific related in the legalese and by the owner of the contract. There are several factors that can disallow an investor from buying the paper. The note may be too young with no seasoning. Seasoning is a term that has to do with the number of payments on the note. An investor checks for the seasoning and investigates that each monthly payment was made on time. A vital necessity is a credit score of the individual making the coupon payments on the instrument. Serious investors desire a minimum credit rating of 625 specifically. Also, an important piece that plays a vital part is the region of the note. In some areas of the county that are very distressed, investors tend to shy away. Likewise, they look for a down payment to have been made at the inception of the instrument so that the payors have a vested interest in making all their payments in a timely fashion because they have already put alot of money in the note.

To wrap this up, there are an absolute mountain of these real estate notes and land contracts that are brought into existence every year… More than you can count for every investor in the county to enjoy buying, trading and selling these contracts for considerable profit.

William Novell is a National Financial Writer for various publications around the country. He has helped many Note Buyers. His forty plus years of experience in money circles has assisted literally thousands in securing their investments.
Real Estate Note Buyers

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