Frequently Asked Questions

What is “Owner-Financing”?

When you sell property and “carry back” a note, you become like a bank. The buyer pays you a down payment, and instead of going to a mortgage company for a loan, the buyer makes payments to you with interest. Benefits include fast closings, easy qualification for a buyer, and best of all, a “Win/win” sale that meets your special needs.

As long as you intend to keep the note whatever terms you and the buyer agreed to is fine (all's fair in love and war - and seller financing). However, the moment you want to convert that note to cash... NOW your decisions are influenced by market conditions and the value of your note is determined by what others will pay.

What is an attractive note?

This is a frequently asked question and it's important to understand our role. First of all, we are not making a loan therefore we do not dictate the rate and terms, which is between the buyer and the seller. The best we can do is give you suggestions how as the seller you may structure the note to maximize the cash value (PV = present value). Almost any seller financed note can be purchased, the question is “how much of a discount”?

Obviously the payors credit is an important factor: not as important as a conventional mortgage lender (in most cases we don't base our price on a "credit score" but rather look for what is in the credit report). The major factors are no bankruptcies in the last 24 months, no foreclosures in the last 12 months and two current trades (opened accounts credit cards, car loans etc.).

The second determining factor is the LTV (loan to value): typically the most attractive note is a first position note at 75%-80% LTV obviously this means the buyer would have a 20% down payment, that's not always practical, oftentimes buyers are attracted to a seller financing arrangement because of insufficient down payment. Suppose the buyer only has 5% down payment, now the seller must consider a 15%-20% 2nd. For example (75%-20%-5%) the 75% first is allot more attractive note then say a 95% first. I recommend not over 80% LTV, especially for a brand new unseasoned note.

Obviously the third factor is the rate and terms: interest rates should be higher than market interest rates typically 8%-10%, the note should be Amortized over 30 years and contain a 7 year balloon payment (this helps reduce the discount due to the "time value of money") to explain it another way: the thirty-year amortization allows for a lower payment for the buyer, the balloon shortens the term for the investor it's a win/win for all parties.

So the short answer to your question: 80% LTV, 30-year amortization with a 7-year balloon at 10% interest.

The extreme opposite is 100% LTV, thirty-year amortization no balloon payment at 5% interest... somewhere between these two extremes (which is determined between the buyer and the seller) is an attractive note that can be purchased with minimum discount.

I hope this answer your questions, we look forward to working with you. If you have specific questions about your note, click the e-mail link at the top of this page and send your questions to one of our experienced staff, we will reply to your inquiry within 24 hours.

How Can I Get Cash as a Property Seller Who is Now Holding a “Note”?

Since you sold property and now receive payments, you can easily sell your note for a lump sum of cash. This money gives you the power to buy another property, settle debts, or free up the money to use however you want to. Doing this allows you to join thousands of satisfied note sellers who now enjoy the benefits of “cash in hand”.

Contact Trust Deed Investments, the most trusted note buyer in America, and our friendly staff will explain your options. You’ll get a fair cash offer, and see how quick and easy it is to get the cash you want.

How Can Note-Funding Help Close a Deal?

Some deals require a property seller to “carry back” an owner-financed note. Trust Deed Investments can pay cash now for the note’s future payments, sometimes even at closing. If we can’t fund the “full” note, often a “partial” works.

What are the Cash-Out Amounts

Trust Deed Investments, like any note buyer, pays less cash now than the current note balance. This is because of the “time value of money”. How much less depends upon many factors.

How to Create a Win... Win Situation Offering "Owner Financing"

How the Seller Wins:	How the Buyer Wins:
Increase marketability with more buyers	Self employed can qualify
Higher sales price and still receive cash	Less than perfect credit qualify
Sell property faster and close sooner	No Loan origination fees
Advertise with "Owner Will Finance"	No pre-payment penalties