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Getting my Borrower an Extra $40K Instead of Foreclosing

seller financing gets you more money

Sometimes you get to be the hero in this business and it feels especially good. I describe one such instance in this month’s episode of Property & Paper Live, our monthly zoom where we talk about seller financing and note investing.

I was preparing to have to foreclose on a lady that was seriously delinquent, but finally she answered the phone. She had requested a Demand for Payoff a couple of times over the previous 4 months, but nothing ever seemed to come through.

Long and short of it, she was under contract with a wholesaler for $65K and they wanted 45 days to close. I asked her why she hadn’t listed it with an agent, as her property looked to be worth $130K – $150K.

She said, “Ms. Dawn, I don’t know how to sell a house, so I just called on a postcard I got.”

Anyhow, she is now under contract to sell her property for $130K “AS IS”… which puts a whole lot more money in her pocket, obviously.

But to get that price, she had to be willing to carry… to offer seller financing to the buyer for 5 years. The buyers are putting down $65K (to pay me off and catch up with property taxes), and there will be a seller financed note for $65K.

Most people will do much better with consistent monthly income. Big wads of cash tend to disappear all too quickly. I let her know that I would be willing to buy her note if she really thought she needed more cash at closing, but that I didn’t advise it. I told her she should keep the cash flow.

However, it seems she is leaning toward wanting to sell the note, which I will buy for about $45K. So she is giving up $20K of her note, but compared to her previous contract, she will walk away with $50K instead of $10K… an extra $40,000.

So… instead of having to foreclose, I rolled up my sleeves, got involved and found a good local agent who helped her sell for double. In the process I inadvertently helped to create another note I will buy at a discount… an even better note than I had before.

When you understand “The Dance Between Property & Paper”, you can solve problems and make money regardless of what is in front of you.

Show Notes:

  • 00:20 – How can you work or connect with Dawn?
  • 02:33 – Dawn’s Owner Carry Note Deal Review – Looking out for your borrower’s best interest.
  • 14:38 – Any issues with the borrower getting out of the contract with the wholesaler?
  • 16:15 – Avoiding potential lawsuits when working with elderly borrowers. 
  • 24:40 – Right now…we have the most fertile landscape for owner financing, notes, creative financing and solving problems outside the box.   
  • 28:46 – Calculator Review – Owner carry back deal on a Commercial Building  
  • 44:36 – Calculator Review – Non-performing Second Position Note out of Los Angeles…should I foreclose??

Watch the full episode on YouTube.

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