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Trade a Mortgage
sell mortgage sell mortgage sell mortgage sell mortgage Positive cash flow property investing positive cash flow positive cash flow positive cash flow
News Flash
Australia’s First Buy Sell Mortgage Market Place
Finally there is a meeting place for buyers & sellers of mortgages & other types of promissory notes right here in Australia. It is packaged right here along side a traditional meeting place of buyers & sellers of property.
Benefits
Australia was built on the concept of free trade at least among Australian citizens [& our government even pays a little more than lip service to the promotion of free trade across our borders.]
The concept of free trade is continued here by allowing citizens to freely exchange goods & services by negotiation of value[ determined by cash & terms of cash to be paid over time.]
It allows people who are wishing to get into property investment a new tool which has a lot of advantages but has not been readily available before.
Typical Seller
Some one who has sold a property & has personally financed the purchaser by way of a 1st,2nd, or 3rd mortgage who wishes to cash in their position now. Egs” Seller” someone who has a position of holding a 2nd mortgage & is receiving monthly payments on it may wish to retire the cash flow earlier for a lump sum payout. “Buyer” someone wishes to acquire regular cash flow by purchasing an interest in a position for a cash some now.
Typical Buyer
Some one who wishes to achieve a higher rate of return on their money then what a bank is willing to pay on an interest bearing deposit. They are willing to accept the security of property to achieve a much higher rate of return on their investment.
Why would you invest in a piece of paper rather then the second biggest aussie dream[an investment property]?
Ok so you have a 100k and you want to buy an investment property. Let’s look at the profit here say over 10 years to even out the ups & downs of the market place. Use the 100 year statistics of property appreciation on average 7%/year.
Example 1 Traditional Property Investment
We take the 100k & get an 80% loan. We purchase a property for $500k.Take a $415k mortgage @ 8% interest only over 10years
Costs Income
Purchase: $500 New Property value $984
Stamp/Legals $15 Income from property rental =$1600pm x 120 = $192,000
Ratesx10yrs $15
Utilitiesx10yrs $10
Mortgage cost 120x$3,320pm = $398k
Total cash outlaid = $100 + $15 + $10 + $398 = $523k
Net position at 10 year mark when sell house = $984 + $192 - $415 - $523 = $238k
Example 2 Non-Traditional Property Note Investment
Let’s take the same $100k to invest & buy some notes to the value of $100k
What will be the net position in 10 years?
For simplicity 1@ $100k paying 20% interest over 10years compounding = $619k Each year profit reinvested
in more Notes so we get a compounding effect
Total cash outlaid $100k
Net cash position after 10years =$629K - $100 = $529k
Now is a $529k profit better then a $238k profit of the traditional property investor? A smart investor might think so!
Is this the best positive cash flow property investing you have seen or what?
The other nice thing about this type of investment is that it is pretty clean [no broken water heaters, leaky roofs,termites etc. You don’t have to search for properties any more. All you have to do is look at a bit of paper from time to time & make the occasional call to the property owner.
Dictionary Definitions
A promissory note, also referred to as a note payable in accounting, is a contract detailing the terms of a promise by one party (the maker) to pay a sum of money to the other (the payee). The obligation may arise from the repayment of a loan or from another form of debt. For example, in the sale of a business, the purchase price might be a combination of an immediate cash payment and one or more promissory notes for the balance.
The terms of a note typically include the principal amount, the interest rate if any, and the maturity date. Sometimes there will be provisions concerning the payee's rights in the event of a default, which may include foreclosure of the maker's interest. Demand promissory notes are notes that do not carry a specific maturity date, but are due on demand of the lender. Usually the lender will only give the borrower a few days notice before the payment is due.
For loans between individuals, writing and signing a promissory note is often considered a good idea for tax and recordkeeping reasons.
A promissory note differs from an IOU in that the latter is a simple acknowledgement of the existence of a debt owed, whereas a promissory note, as its name implies, contains an affirmative undertaking to pay the amount stated.
Example of a Promissory Note in Legal speak
Promissory Note
On this date of [DATE], in return for valuable consideration received, the undersigned borrower[s] jointly and severally promise to pay to [LENDER'S NAME], the "Lender", the sum of $[DOLLARS] Dollars, together with interest thereon at the rate of [RATE] percent ([RATE]%) per annum.
[Select from the following provisions, as desired]
Terms of Repayment: This loan shall be repaid under the following terms: [describe terms]. All payments shall be first applied to interest and the balance to principal.
Terms of Repayment (Periodic Payment): Starting on [DATE] and continuing until the principal balance of this Note and any accrued interest have been repaid in full, on the [DATE] day of each month the borrowers shall pay the amount of $[AMOUNT]. All payments shall be first applied to interest and the balance to principal.
Terms of Repayment (Balloon): Starting on [DATE] and continuing therafter from month to month until the date of [DATE2], the borrowers shall make payments of interest only in the amount of $[AMOUNT]. On [DATE2], final payment is due in the amount of $[BALANCE].
Payable On Demand: The entire unpaid principal and accrued interest thereon, if any, shall become immediately due and payable on demand by the holder of this Note.
Late Fees: In the event that a payment due under this Note is not made within ten (10) days of the time set forth herein, the Borrower shall pay an additional late fee in the amount of $[AMOUNT].
Late Fees: In the event that a payment due under this Note is not made within ten (10) days of the time set forth herein, the Borrower shall pay an additional late fee in the amount of [PERCENT] percent of said payment.
Place of Payment - all payments due under this note shall be made at [DESIGNATED LOCATION], or at such other place as the holder of this Note may designate in writing.
Prepayment - This Note may be prepaid in whole or in part at any time without premium or penalty. All prepayments shall first be applied to interest, and then to principal payments in the order of their maturity.
Default - In the event of default, the borrower[s] agree to pay all costs and expenses incurred by the Lender, including all reasonable attorney fees (including both hourly and contingent attorney fees as permitted by law) for the collection of this Note upon default, and including reasonable collection charges (including, where consistent with industry practices, a collection charge set as a percentage of the outstanding balance of this Note) should collection be referred to a collection agency.
Acceleration of Debt - In the event that the borrower[s] fail to make any payment due under the terms of this Note, or breach any condition relating to any security, security agreement, note, mortgage or lien granted as collateral security for this Note, seeks relief under the Bankruptcy Code, or suffers an involuntary petition in bankruptcy or receivership not vacated within thirty (30) days, the entire balance of this Note and any interest accrued thereon shall be immediately due and payable to the holder of this Note.
Joint and Several Liability - All borrowers identified in this Note shall be jointly and severally liable for any debts secured by this Note.
Modification - No modification or waiver of any of the terms of this Agreement shall be allowed unless by written agreement signed by both parties. No waiver of any breach or default hereunder shall be deemed a waiver of any subsequent breach or default of the same or similar nature.
Transfer of the Note - The borrowers hereby waive any notice of the transfer of this Note by the Lender or by any subsequent holder of this Note, agree to remain bound by the terms of this Note subsequent to any transfer, and agree that the terms of this Note may be fully enforced by any subsequent holder of this Note.
Severability of Provisions - In the event that any portion of this Note is deemed unenforceable, all other provisions of this Note shall remain in full force and effect.
Choice of Law - All terms and conditions of this Note shall be interpreted under the laws of [JURISDICTION].
Signed Under Penalty of Perjury, this [DATE] day of [MONTH], [YEAR],
_______________________________________
Borrower(s)
[Note- each borrower should sign separately.]
Signed in the presence of:
_______________________________________
Witness
[Note- the lender may not be a witness. If more than one witness is used, each should sign separately.]
Factors to Consider
Some factors you may wish to consider in establishing for yourself the value of a property mortgage investment
What is the underlying property address
What is the property value now & will it increase
Do the buyers Live there
What was the date of the sale
Is your note a 1st or 2nd mortgage position
What is the principal balance on the first loan
Who is the lender on the first
What is the interest rate on the first
What was the original face amount of your note
What was the date of your note
What is the interest rate
What are the monthly repayments
What is the due date[expiry]
Is there a balloon payment at the end
How much is the balloon payment
Are all the payments up to date
What is the loan balance in Present time
What is the last payment made[month]
Character of person who owes the money
What does he/she do for a living
Why are you selling the note
When do you need to sell by
How much are you making for the note
What’s the asking price
 | sell mortgage Questions? Ask Kama
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