February 27th, 2019
Think Realty Radio Podcast Review
Christine Gurst from Capercorn Mortgage discusses the secrets behind creating seller financed notes for real estate investments and selling them to note buyers.
On today`s episode of Think Realty Radio with Abhi Golhar, he interviewed Christine Gurst from Capercorn Mortgage Investments (Text 972-679-3120). Christine believes that when you hold mortgage notes as an investment you are creating long-term cashflow. This is better than Fix and Flip investment strategies which really just create a job. Every time Christine picks up a mortgage, she is giving herself a pay raise. That is because each mortgage creates a new monthly passive cash flow into her checking account.
Capercorn doesn`t originate loans. Instead, they buy notes from Mom & Pop Investors. When they buy a note they are looking for equity in the note the same way that a real estate investor looks to capture equity in a real estate investment. There must be no more than an 80% loan-to-value on any notes that they buy. This gives investors an opportunity to sell houses through seller financing. Here is how it would work: The investor sells the house and receives a 10% down payment from the buyer. He then creates an 80% primary mortgage and a 10% piggy-back secondary mortgages. The investor can sell the 80% loan to recoup their costs and payback any debt, pocket the 10% down payment, and keep the remaining 10% loan as cash flow. This method allows investors to exit each property, maintain cash flow, and reinvest capital into the next project!
In order to sell a note to capercorn it must be seasoned (performing) for at least six months. Right now she is buying notes at 90-92% of the face value if they are for 6% above prime. This means a rate of around 10-11%. Otherwise, the note would sell at a steep discount. Loan terms can be for up to 30 years, but you need to make sure it is a common term such as 10, 15, or 20 years.
All notes should be created through a registered mortgage loan originator. If you do over five a year and fail to do this, you are in violation of the Dodd Frank Act. It is also important to have the mortgage note prepared by a lawyer and to proof read them. Typos are way to common.
Christine says that she offers training in how to create these notes. She is on my short-list to contact when I am ready to seller finance my first property.
These notes were prepared by Casey Ryan Richards (http://www.CaseyRyanRichards.name) from an episode of the ThinkRealtyRadio.com podcast
Casey Ryan Rutland | Real Estate Investor 