California NoteBuyer LLC January 2015 Q & A Greetings! I would like to start the new year by sharing a few questions I got throughout the course of last year. Hope it helps you if you have been wondering the same thing: Question #1: In April 2014, I sold a home I used to live in and carried back the note in my own name. I also own another home as a rental property and my tenant would like to buy it, but he wants me to carry the note. I understand there are new rules for seller financing. Can I do this without violating the rules, getting licensed as a loan originator, etc.? Answer: Yes you can do this. If your "tenant" transaction closes after April 2015, you will meet the rule exception that allows you to sell one property within a 12 month period as an individual. If you close prior to April 2015, you can meet the other rule exception - selling 3 properties in a 12 month period - by having a fully amortized note with no balloon payment, use your tenant's rent payments as a guide to his ability to repay the note payment. Use a fixed rate to simplify the transaction, and make sure you are not a contractor who built this home. Also, see my December 2014 Newsletter for the rest of the rules. Question #2: I have a note with approximately $100,000 balance. If I sell the note, I want the full $100,000. That's what the note says I am owed. I have heard that note buyers won't pay me the full amount. Why not? Answer: Risk. Your $100,000 note is a Promissory Note - your buyer "promises" to pay you the full amount in monthly installments - he does not "guarantee" to pay you. The biggest risk you took in your transaction is that your buyer may not keep his promise. If he does not, you now have the financial and emotional issue of foreclosure to deal with. Not a pleasant thought. Note buyers always have the downside - possible foreclosure- to take into account in measuring the risk. All the elements of your transaction - property type and value, down payment, note terms, buyer credit history, etc. are evaluated. The result is the "price" to you. Unlike loan officers/mortgage brokers, note buyers don't meet with your buyer, don't ask for current financials, don't ask for pay stubs or tax returns, don't check with his employer, etc. This added risk must be accounted for. When all these variables look great, your price will be around the top that the secondary market is offering. Plus, unlike banks that typically sell off their loans, most note buyers hold on to theirs - like in marriage - for better or worse! Question #3: I have never done a seller carry back sale. I inherited a house from my parents and have a friend who is interested in buying it. I may consider carrying the note, but am afraid that I will make a mistake because I don't know what I am doing. Your thought? Answer: Call me. I will give you some basic education and guidelines, the do's and don'ts, and help you get comfortable in your negotiating should you decide to go that route. "Follow your heart, but take your brain with you."..... Alfred Adler.               1st Time Home Buyers - Still on the Outside Looking In The National Association of Realtors ( NAR) reports that only 33% of home purchases in 2014 were by 1st time home buyers. This is the lowest level in almost 30 years. The norm is about 40%. Why? We know the answer. Higher home prices, tight lending, and an unsteady job market are the "usual suspects". NAR Chief Economist Lawrence Yun says their absence is slowing the overall recovery of the economy, and he expects home sales to fall this year for the first time since 2010. This 7% spread ( 40%-33%) presents opportunity. If you have a house for sale, you may very well meet one of these 7% folks. You may like them, you may want to sell to them. If not, ask a local realtor for the best 1st time buyer he/she has met and let them see your house. Work out a solid transaction that protects you both. Help our recovery. "The most terrifying words in the English language are: I'm from the government and I'm here to help."..... Ronald Reagan.                                   Go East Young Man, Go East I grew up on the East Coast. To me and other young guys like me, California was the promised land. Warm weather, bikini girls on the beach, career opportunity. Go West Young Man was the calling card at the time. So I came and stayed. Times have changed. The US Census Bureau says that our high home prices and cost of living is forcing people out, especially to Texas and other Western states. Since 2007, we have the largest net loss of workers than any other state. We have more than half of the most expensive residential areas in the country. If someone is making less than $50,000 it is almost impossible to afford a nice home. 75% of our "outflow" are people in this economic strata, who are now leaving for the same opportunity I was seeking so many years ago. More affordable housing and in some cases, more job opportunities, lie elsewhere. Make a new friend in your area who is from California. If you have a house to sell, offer to carry the note. Tell him you learned this stuff from a guy in California. What goes around comes around! "It's better to walk alone, than with a crowd going in the wrong direction."   Diane Grant If you enjoy this Newsletter, please pass it on to a friend. If I can make it better, please tell me how. Thanks for reading. Denny Stanz, Note Broker CA#01915404 www.CaliforniaNoteBuyerLLC.com dennystanz@verizon.net 760-245-5366 760-245-5367 fax If you enjoyed this Newsletter, please forward it to a friend. If I can make it better, please tell me how. Thanks for reading. Denny Stanz, Note Broker  CA Broker License # 01915404 www.CaliforniaNoteBuyerLLC.com 760-245-5366 760-245-5367 fax