January 2018

A Seller Financed Deal is an Ongoing negotiation

The Deal Isn't Done Until the Note is Paid Off

Back in July 2017 I wrote about a seller financed multi-property deal I locked up. I made my $1,000/month principal only payments on time, but the December rolled around and I like to mail out my "Extra Money" letter just to see if any of my seller carry lenders bite on a tasty pile of cash in exchange for just a little discount off the yearly payments I have to make. 

Here is what the cover letters says:

Dear <Seller's Name>,
I recently had a small note pay off and have come into a bit of ‘extra’ money. I’m not in a position to pay you off, but if you’d like a lump sum payment for all of this year’s payments, I might consider it. What if I agree to pay you for 10 months, all upfront, and give me credit for 12? I’ll make your January check in the amount of $10,000.

If you’re interested, just sign and fax or mail back the enclosed acceptance letter.

Page 2:

Note Payment Modification Acceptance Letter

Note Secured by real property located at: <Property Address>
Regular monthly payment: $1,000.00
I agree to accept a lump sum payment for all payments due in 2018.
The amount I agree to accept for all payments is:
Ten Thousand Dollars and 00/100 Cents. ($10,000.00)

This lump sum payment amount covers all payments due for January through December 2018. My next regular payment will be due on 1 February 2019 for January 2018’s regularly scheduled payment.

<Seller's Name>                             Date
Note Holder

Pretty basic stuff. It will cost you 50 cents in postage, an envelope, two sheets of papers and some printer ink. If you're not willing to invest less than $1 to make $2,000, I'm not sure real estate is the right investing vehicle for you! Anyway, on with the story. I sent the letter and I didn't hear anything for a week or so. Not too odd as some never respond. Then out of the blue he calls. I guess something happened with his mail, but he's excited about the prospect of getting a lump sum payment all up front. He is so excited he agrees to drive from San Bernardino all the way down to Newport Beach to meet me. Being the friendly guy that I am, I buy him and his parasite entourage a few burgers at In-n-Out. I hand him a check and he gives me the signed document. What do you think my return is on my $10,000 investment? Would you do this deal?

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