Cash Flow Solutions Specialists : Integral Financial Solutions LLC : Structured Settlements, Real Estate, Inheritance

In the current market, it is hard to get loans to buy properties and many real estate sellers are stuck with properties they can’t sell. There is a plan B! Plan B is to be the lending institution. In other words, sellers can use owner financing to sell the properties and then turn around and sell their owner financed note.

To make a good marketable note that you can sell for the highest amount you should do the following:

• The down payment should be at least 10%.
• A competitive interest rate, not too low, not too high. In general, 8-10% is reasonable.
• Monthly payments are for principal + interest. Avoid interest-only terms.
• Avoid Balloon payments.
• Credit score, the higher the better. Make sure you get a credit report on the prospective buyer.
• The note has to be in 1st position.

In addition you can ask for a higher purchase price when you carry the financing. This is very doable, but please seek professional help if you have questions. Ask around for a local real estate broker that is familiar with owner financing, or contact us, we are here to help.

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Being willing to carry back a note on your property, precluding the buyer from having to get bank financing, can be a powerful tool. It can get you a higher price for your home and a quicker sale. In today’s real estate market, this can make the difference between your house languishing on the market for months on end, and finding a buyer and moving on with your life.

Then you have 2 choices:

• Keep making payments on your current mortgage and retain the difference between what you owe every month, and what you are collecting on the note. You’ve created cash flow for yourself.

• Sell all or part of the created note. Pay off the mortgage and use the balance for whatever needs you have.

Creating the note properly is the key to getting the most value for this cash flow. Interest rate and the term of the note are very important.

Consult with a professional, or do your research beforehand. A note can be created and sold at the same time if handled properly. It’s worth looking into.

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Are you thinking about selling, or do you need to sell your home in today’s market?

• Do you have equity in the property?

• Is the property sitting there not selling?

• Do you have a buyer, but they can’t get a loan?

Consider seller financing (carrying paper, seller carry back). It may be the best way to adapt to the current climate in the real estate market.

• A seller can get dollar for his property and close in 2 to 4 weeks, instead of languishing on the market for months unsold.
• A buyer can acquire a home or investment for himself or his family without the pain of having to deal with crippled banks or mortgage companies.

The owner financed note or mortgage that you create can then be sold to an investor looking for cash flow. You get the money you need to pay off your mortgage or move on with your life. You can also collect the monthly payments yourself and keep the profits.

Both buyers and sellers benefit regardless of market conditions.

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You’re receiving a regular check in the mail or directly into your checking account. Lots of people think that is a very good thing! Why would you want that to stop?

There are many reasons, these are just some of them:

• The uncertainty of the check showing up every month.

• Buying a house.

• Medical bills.

• School bills.

• Vacations.

• Other investment opportunities.

This is an important decision, and the clearer you are on your motivations and real needs, the easier it is to make the right decision. There are many options in selling a cash flow. It’s not just sell it all or keep it all. If you know what you need, you can negotiate from a position of strength. You can make a decision that serves both your short term and long term financial future. Take the time to understand your underlying motivations, and your options when making an important financial decision like this.

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Many people have a financial goal of creating enough passive income coming in on a regular basis, that they then don’t have to go to “work “ every day. If you are receiving a regular cash flow, or income stream, you own a valuable asset. It can be part of your financial plan of creating the passive income you need to quit working. Others, private investors and institutions, have cash to invest to create this regular income stream, so they are interested in your regularly received payments. A market is created. They want a better rate of return than a bank or CD will pay. Investing in your cash flow is a way to receive safe and better returns.

The question then is what is best for your financial future?

•  Keep receiving this regular monthly income, which many people aspire to, or get a lump sum of cash today, for your immediate use.
• What will you do with the money once it’s in your hands?
•  How much do you really need right now?

These are the questions you should be asking yourself, and having answers for, before you make an important financial decision like this. 

There is no right or wrong answer. It all depends on what are your short and long term financial needs and goals. The point is to be clear on your needs and goals. Then you can make informed and smart decisions in your best interests.

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Are you receiving a regular cash flow or income stream, whether from a:

•  real estate note or mortgage,
•  business note,
•  structured settlement,
•  inheritance, or
•  lottery winnings

You can get a lump sum of cash now and be done with the monthly payments. However the best choice is not always to sell the whole thing. How much cash do you really need now, and why do you want to get rid of a valuable asset that provides you with regular cash flow.

Especially in today’s market, most people don’t realize that they can sell only part of the asset, or so many number of payments. They can sell, say 60 payments. When the 60 payments are up, they get the asset back and they start receiving the payments again. There will still be a high value on the note. So the owner can receive a lump sum of cash for part of the asset, and then receive the asset back with a high balance remaining.

The question then becomes:

Why are you selling?

How much cash do you really need right now?

Be honest with this last question and it can change your experience of deciding to cash out of a valuable asset like a payment stream. What will you do with the cash you receive is the question you should be thinking about.

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