How to Manufacture Your Own Financing

SPEAKER: Author, Investor, Educator, Michael Morrongiello

Don't just survive the credit crunch - THRIVE during changing market cycles!

Discover how to effectively create marketable real estate-secured Notes that can be easily and readily converted into a cash lump sum. As the real estate markets continue to soften, Wall Street no longer buying certain loans, and qualifying criteria becoming more stringent - with the right knowledge, you can fill the void in the marketplace by offering seller financing for both the acquisition and disposition of properties.

What is Seller Carryback financing?

When a property seller assists the buyer by acting as the lender, the property seller may finance part or all of the sale. The term given to such seller financing is "carryback financing." A seller is literally carrying back part or all of the financing on the property instead of a financial institution.
In today's tight credit Market; Seller carryback financing is vital to a successful sales program. It is so important that if more property sellers, their agents, buyers, and Real Estate Investors understood the principles of seller carryback financing, more real estate activity would be generated across the country than with any other marketing tool!

A Few Advantages of Seller Carryback Financing:

It makes a listing more salable.
It provides the seller with an interest return (yield) on their note that exceeds savings accounts, CD's and money market accounts.
The seller carryback note(s) can be an extremely safe investment.
The seller carryback note(s) can be made salable, should the holder need cash in the future.

At this Meeting you will learn About

•  Understanding "Paper" - WHY use seller financing to buy or sell
•  Different types of security instruments which can be used
•  Relationship between PRICE vs. TERMS
•  Wrap's -- Your Multi Purpose Financing Tool
•  Magnifying yield & capturing amortization
•  Deal Structuring tips, tricks, and techniques
•  Using other collateral
•  The some NOW, some LATER concept
•  Generating solutions and how to profit with "paper"

* The type of notes preferred by "paper" investors or note buyers. Owner-occupied homes are the most desirable. History has proven them the most stable. Notes secured by land usually have the greatest risk.

* Real estate values fluctuate both up and down over time, even in good areas. Why a note holder's best protection against loss is protective equity established at the time he acquires a note. An owner with a substantial equity who is paying on a note will be motivated to protect his/her equity position.

Some Terms & Concepts to become familiar with:

Your Financial Calculator:

TIME: Expressed in months or years (Calculator symbol = N)

INTEREST: The rate of interest or yield desired usually expressed per month or per year (Calculator symbol = I). The annual interest rate must be divided by the number of payments that the note requires during the year. Monthly + by 12, Quarterly + by 4, semiannually + by 2, etc..

PRESENT VALUE: The dollar value today of dollars to be received in the future. (PV is the symbol.)

PAYMENT: The amount of money paid periodically on the note. In the above example, payment includes principal and interest. (Payment is the PMT symbol on a financial calculator.)

FUTURE VALUE: As a seller carried back of a note to be fully amortized over 10 years, the future value (FV on the financial calculator) would be zero. However, suppose a note has a future balloon payment due before it fully amortizes. If you are solving for PV, you must first calculate the amount of the balloon or the Future Value (FV) before you can calculate or solve for the discounted PV value.

More Terms

PROTECTIVE EQUITY: Is the current market value of the property less the total debt on the property. It is the sellers' or lenders' cushion against possible loss. The larger the protective equity, the more protection for the lender. Note: Having substantial protective equity is the best way to take back a mortgage without being taken.

LOAN-TO-VALUE (LTV) ratio is the amount of debt on a property expressed as a percentage of the Fair Market Value (FMV) of the property. Example: A property valued at $100,000 has a first loan of $50,000 and a second loan of $20,000. The $70,000 total debt divided by the $100,000 Fair Market Value (FMV) = 70% LTV. The lower the loan-to-value ratio, the more equity an owner has. For example, with only $50,000 debt, the same property would have a LTV ratio of 50%.

About the Speaker:

Michael Morrongiello is an active investor who specializes in Real Estate & Real Estate "Paper" investments. Widely known as having one of the most knowledgeable & creative minds in the paper business, Michael started creating paper as a result of his own Real Estate investment activities in the early 1980's.

Michael is the author of; "Paper into Cash - The Convertible Currency" - the definitive home study course that assists you in structuring seller financed transactions while creating marketable Notes and "The Unity of Real Estate and Paper" - a course book that outlines numerous real world in the marketplace transaction scenarios and solutions where Real Estate and financing techniques involving "paper" can be effectively used.