Monday, May 28, 2012

Notes for Sale – Getting Started in the Note Business.

While listening in on a podcast the other day, hosted by Brecht Palombo, founder of some of the data points presented during the podcast were quite interesting and worth sharing.
  • At the height of the mortgage boom, 14% of property financings were still owner financed, despite easy credit conditions in the marketplace.
  • Today, approximately 26% of property transactions involve owner financing, which seems reasonable in context of the tight credit environment we currently face.
Just make aclick here to know how to find a commercial real estate lender.

Give or take a percent, these numbers imply a lot of private notes have been and will continue to be structured & created by property owners as a means to get their real estate transaction done. On the other side of the coin, there are many private note investors who are actively searching for more competitive yields in today’s low interest rate environment.   The two should meet. 
Brecht’s guest speaker was Troy Fullwood, founder of Pinnacle Investments and a 10 year veteran in note acquisition.   Relaxed, casual and informative, Troy spoke about getting started in the note business using plenty of real life examples and cases.   Troy also generously shared his strategy for sourcing owner financed notes using specific examples and novel ideas on how to reach note owners.   Finally, the podcast covered what Pinnacle was seeing in terms of rate, term and credit quality in the private market.   A good read/listen that can be found at
A most notable quote from the podcast was  “One of the reasons I wanted to do this call with you today Brecht, was to, how do you say, for lack of a better word stir the pot up a little bit. Those people who are thinking outside the box are going to be able to capitalize on today’s marketplace.”
That’s a great approach.  Notes are being created in owner-financed real estate transactions in ever increasing numbers and will be with us a while.   If you are a real estate agent, mortgage or finance adviser here’s another area of opportunity for you to team up with quality private money lenders advisers who represent local demand for competitive yielding real property notes.   Notes aren’t exclusively the domain of the “big guys”.
Brecht Palombo, founder of a data services site that real estate, investment and banking professional use  to find bank contacts and evaluate the REO and non-performing loan information for US banks.
Troy Fullwood, founder of Pinnacle Investments, a property investment company focused on the acquisition of residential and commercial whole loan assets and owner financed real estate notes.  Since 1997 Pinnacle has been involved in over 12,000 secondary mortgage transactions throughout the United States and Troy is a frequent speaker at industry events and conferences.

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Preparing for Commercial Real Estate Loans from a Commercial Mortgage Lender

Business real estate, indeed, any real estate can be a complicated business. When it comes to commercial mortgages, typically the commercial property itself is used as the collateral in default of payment. Finding a commercial mortgage lenderis easier than many may people think; many banks, even in tough economic times are more willing to extend loans to a business where they may not be willing to extend a loan to an individual. Commercial real estate loans will still need for the borrower to have a good credit score, however, and often seek information about previous and prospective business successes. 

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Depending upon the bank's criteria, when it is time to underwrite commercial real estate loans many companies will look carefully at the property in question. This will often include an inspection of the commercial property, and will take into account the condition, location and upgrades of the property. A commercial mortgage lender may look at what is called loan to value, which is the amount of the loan versus the amount of the value of the property. In addition, the interest rates for a property used for commercial purposes may be somewhat higher than a loan for a residential property.
If you want to open a small business or move to a different property, finding a commercial mortgage lender who is well versed in small businesses is crucial. Many commercial real estate loans for a small business may have stipulations, due to the higher risks that come with operating a small business. However, there are many sources that can help you understand the financial requirements you need. Look online, and see if there are checklists that can help you prepare for getting a commercial loan, and always check into government grants or loans, as this may be a potentially lucrative resource. 
If you want a local commercial mortgage lender, always try to look at the competition carefully. See which company offers the best terms for commercial real estate loans, and which have had the most foreclosures. If possible, make an appointment at several different companies to consult about initial terms, financial possibilities and opportunities. This may give you an added advantage when it is time to draw up the loan terms.

Tuesday, May 1, 2012

Notes For Sale - What Are Notes? Who Are Note Brokers?

Are you looking for notes for sale or a list of note brokers Although there are many resources on the internet about this, some of them are not worth the “ink” they’re not printed on! As you know, note brokers are middlemen (or matchmakers, if you prefer) who connect buyers and sellers of one particular financial commodity – the note. The note is a form of debt, usually connected to some real estate. The broker is out there to find an investor who wants to buy a note, and put them in contact with the current owner of a suitable note.

Any list of note brokers is going to include many people who have either a financial or real estate background (or both) and who are always looking for notes for sale. As the matchmaker, they help facilitate financial transactions that two parties are already in need of, but may lack the resources to put together on their own. In exchange for this valuable service, the broker receives a commission that justifies their time spent. The current note owner gets paid in cash, and the new investor owns an instrument that will pay dividends along the long term. In effect, everyone wins.

Private Money Lender, Rehab Loan

 When perusing a list of note brokers, you want to be sure that you are dealing with someone who is on the up and up. The same is true when you are evaluating notes for sale. No matter where he or she started, the note broker is someone you need to be able to trust to come through on a complex financial transaction. He or she should be someone of integrity, with a clear background in real estate, finance, or law, who has a strong reputation in the community. This can also be evaluated through membership in professional associations and organizations.

If you are interested in adding your own name to the ever growing list of note brokers, and finding notes for sale for your own business, it is not impossible for a newcomer to get started. Connect with real estate offices, banks, and others who are involved in the real property market if you plan to deal in those kinds of notes. Of course, there are other options available which might also suit your talent and background. You will have to build a roster of sources that will allow you to select the “juiciest” notes and beat out your competition, which is expected to grow.