Using hard money to leverage Owner Carry real estate purchases:
Over the course of time in working Owner Carry financing deals (AKA Seller Financing), we formulated some creative ways to acquire property using Private money to leverage the deal. This would not involve conventional financing until the contract term was up and it is time to refinance the property.
Some of the more critical and fundamental aspects of this type of financing structure is to find:
1. A property owned free and clear (or with a small existing mortgage easily covered by the first mortgage). You can start by using an online title research company to find any existing mortgages (and amounts), liens and tax status including possible NOD-Notice of default or any pre foreclosure proceedings.
2. A seller willing to carry a note in second position for a short term.
3. A private money lender with an acceptable, doable and rate and term loan.
4. A title company that can work up the transaction and escrow, setting up a payment account to ensure that payments are being applied correctly I.E. taxes, insurance and principal to the seller and first mortgage if applicable.
Finding the property to fit this criteria, with the upside potential for a significant profit margin is the first task at hand. We have had to pull property reports and multiple properties (sometimes 10 to 15) to find one that actually had little or no mortgage in place. Most properties you will find today are usually maxed out in a debt to equity position or have a mortgage that exceeds the homes value.
The most difficult task may be to contact and negotiate an amicable seller carry structure where the seller feels safe in carrying in a second position on his or her property with a private money first. This more than likely will require some down payment money from the buyer (Skin in the game) so to speak to sweeten the deal.
The most difficult task may be to contact and negotiate an amicable seller carry structure where the seller feels safe in carrying in a second position on his or her property with a private money first. This more than likely will require some down payment money from the buyer (Skin in the game) so to speak to sweeten the deal.
If all goes well and everything pencils out, you just purchased a property with little or no money down leveraging the deal with Private money and some educated research.
US Title Records
Below arec states covered by this article for Title Search services offered through this site:
Alabama – AK. Alaska – AZ. Arizona – AR. Arkansas – CA. California – CO. Colorado – CT. Connecticut DE. Delaware – FL. Florida – GA. Georgia – GU. Guam – HI. Hawaii – ID. Idaho – IL. Illinois – IN. Indiana – IA. Iowa – KS. Kansas – KY. Kentucky – LA. Louisiana – ME. Maine – MD. Maryland – MA. Massachusetts MI. Michigan – MN. Minnesota – MS. Mississippi – MO. Missouri – MT. Montana – NE. Nebraska – NV. Nevada – NH. New Hampshire – NJ. New Jersey – NM. New Mexico – NY. New York – NC. North Carolina – ND. North Dakota – OH. Ohio – OK. Oklahoma – OR. Oregon – PA. Pennsylvania – RI. Rhode Island – SC. South Carolina – SD. South Dakota – TN. Tennessee – TX. Texas – UT. Utah – VT. Vermont – VA. Virginia – VI. Virgin Islands – WA. Washington – WV. West Virginia – WI. Wisconsin – WY. Wyoming
