So, your Rental investment has been seeing margin erosion and time commitments have not changed! What can you do? The solution is to convert your rentals to seller financed Notes, becoming the bank instead of the landlord! And now we are introducing the new Rental Conversion Program, a guided process led by seasoned professionals to make the conversion as easy as possible!
INTRODUCTION
As previously discussed in “Transition from rentals to notes and Double your Return!”, the returns from the rental market have been dropping steadily for years. To improve and restore your level of return, converting your Rentals to Notes is both profitable and a considerable time saver. To support this conversion, we are introducing the Rental Conversion Program, an initiative designed to help you transition to Notes, making the effort smooth and seamless!
BACKGROUND
In the chart below, we compare the profitability of a rental in 2018 and 2025. While FMV and rent have been increasing at a strong pace, the expense side has been increasing at a far faster rate, resulting in a dramatic drop in your rate of return. While you are working at the same rate, your overall income has been dropping significantly.
In addition to decreased margins, there is a strong emotional toll of owning and managing a Rental portfolio.
Physical Stewardship – You remain emotionally attached to the physical state of the property and experience a sense of resentment when a tenant does not care for the home.
Human Relationship – Relationship with the tenant is adversarial. You are the authority figure who must enforce the rules, collect rent and inspect the premise.
Lumpy Stress Cycle – Expenses are “lumpy”! You might have 6 months of solid returns followed by a $5,000 repair that ruins your annual profit, creating a constant state of high alert.
Vacancy Trap – When a tenant moves out, you have the clean up and repair effort followed by the search for a new tenant which can take months. And after another year, you do it all again!
SOLUTION – SELL USING A SELLER FINANCED NOTE
In the chart below, you can quickly see the financial benefit of Notes. While income is roughly the same, expenses are dramatically less resulting in a 90% improvement in margins! And the unsaid benefit is the reduction of time spent on your investment!
As a quick reminder, here are some other benefits of owning Seller Financed Notes
You Sell the Property – With a Note sale, you no longer own the property. No longer are you worrying about repairs, taxes or upkeep!
Buyer Owns All Responsibility – The buyer pays all property taxes, insurance and all maintenance. You never get a midnight repair call again!
You are the Bank – Instead of receiving a lump sum, you carry the note at 10% interest for the next 30 years. The buyer pays you principal and interest every month for the duration of the loan.
A Servicer Collect for You – A third party loan servicer can manage all payments, collection efforts, escrow payments and reporting…freeing up your time to do whatever you want!
SOLUTION-NEW RENTAL CONVERSION PROGRAM (RCP)
The Rental Conversion Program (RCP) is a new program designed to assist rental owners throughout the conversion process, from reviewing your rental portfolio, to selling the rentals, to creating the note, and finally setting up the servicing. The RCP is a program designed and built by Note experts to make the transition to Notes as seamless as possible. The steps are listed below.
Model the Property – We run the number on your property (payment, rate, return) so you can see the full picture before committing.
Qualify the Property – We assess the condition and value of your rentals to ensure the rentals are ready for seller financing.
Find the Right Realtor -We connect you with an experienced real estate agent, with knowledge of seller-financed transactions and the non-qualified mortgage buyers.
Identify the Buyer – We identify the right buyer, exploring if your tenant is a candidate or find a buyer in the vast non-Qualified Mortgage (QM) community.
Structure the Terms – We assist with the underwriting, sales price, interest rate, down payment and term, focusing on maximizing your return.
Loan Underwriting – We will create a loan that is fully Dodd-Frank compliant underwritten through a licensed RMLO partner, and we will fully vet your buyer.
Transition Coordinator – We manage all the paperwork and communication between you, the buyer, the realtor, the closing agent, and the title company.
Loan Servicer Setup – We will work with a third-party servicer to set up your new loan. This third-party servicer will handle all borrower communications, collect payments, manage all escrow, and send you your monthly payments.
Sell Part of the Loan (optional)- Need more cash now? We can also help you sell a part or all of your remaining payments for capital now!
SUMMARY
Rental margins have been decreasing for years. Rental owners are looking for other investment opportunities to regain margins and get their time back. Converting rentals to Seller Financed Notes will accomplish both goals, by dramatically improving margins and cutting time commitments. We tap into a massive pool of non-QM buyers that will provide solid monthly payments. The new Rental Conversion Program (RCP) does the heavy lifting, guiding and assisting you from the start to the finish of your conversion. Each solution is tailored to your individual needs by seasoned Note, real estate and title professionals!
CONNECT WITH PEAK NOTES
MEETING
Why not set up a meeting with a Peak Notes specialist to discuss the Rental Conversion Program (RCP) and how converting your Rentals to a Notes so you can restore and improve your margins! Meetings are brief, cost nothing and can give you more insight into how you can maximize your investment potential!
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NEWSLETTER
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