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Real Estate Notes

Real estate notes are legal documents used to assign buyer rights and record details of the transaction. Also known as "real estate receivables," these documents are created when a piece of real estate or land is sold. It could be a mortgage note, land contract, or contract sale where the buyer makes cash payments directly to the seller.

In essence, real estate notes are used as collateral and to document the promise to pay the note. They are frequently used along with mortgages and aide in the financing of real property. They are almost always used when the seller offers seller carry back financing. In this type of real estate transaction the seller carries a portion or the entire amount of the loan. The buyer pays the seller a down payment and the balance is paid in installments.

Notes payable are oftentimes used when individuals purchase stocks within a property, as opposed to acquiring the entire property. Many investors partner with others to afford a purchase. Each investor purchases stocks and the money goes to fund a real estate investment trust. REITs are companies that own a considerable amount of land and operate profit-producing properties.

Real estate notes can be sold in whole or part. It's a common practice for individuals to sell a portion of their real estate notes for cash. Selling real estate notes is a quick way to raise cash but it's not without risk.

First and foremost, the seller will not receive full face value for the note because there are fees associated with the sale. Additionally, the property owner may have to obtain an appraisal or pay a title property fee.

When seller carry back financing is offered, the seller can sell the real estate note to an investor, such as Simon Volkov. This type of financing is becoming increasingly popular for both residential and commercial real estate transactions.

Owners who offer seller carry-back financing can sell their real estate receivables to obtain a lump sum cash payment. Simply put, a commercial real estate note is a document used for the sale of investment property. Commercial notes are written for office, retail and industrial establishments.

Buying and selling real estate notes is a multidisciplinary field. Those who chose to become involved should invest time in educating their self about real estate and income tax laws, finance, sales and leasing, and property management.

The Internet is a great place to locate real estate information. Pay a visit to your local library or attend a real estate investing class. Check the Classifieds section to locate realtors and investors who offer real estate investing classes.

Real estate investing can be an exceptionally lucrative venture. For those who take the time to learn the trade, it can significantly increase their bank balance and financial portfolio.

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Published on October 03, 2007 at 10:34 AM

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