Dawn Rickabaugh - Note Queen

[Disclaimer: while a Note Queen often creates real estate notes, she apparently creates other notes from time to time . . . love notes, thank you notes, inspirational notes, mental notes, even musical notes. The administrators of this site take no responsibility for these creative aberrations, leaving the reader wholly responsible for deciding how much, if any, to discount this note.]

Doesn't it seem like the whole world is going through a mid-life crisis?

My own personal mid-life crisis started five years ago. I quit my job as a nurse (with a comfortable 6-figure income), and just launched out into the wide wide world, wondering what I wanted to be when I grew up. The move was part genius, part retard . . .

I don't recommend that you try this at home. It's definitely not for sissies, which is why I really shouldn't have done it that way. I tend to whine about minor headaches and hangnails, and use pain of any kind as an excuse to wine.

I fell flat on my face, forced to acknowledge what seemed like abject financial failure for the first time in my life. And I didn't know how to separate my sense of self worth from my net worth, which sent me into a literal state of panic within the first year.

I felt like an outsider looking in. I watched the whole world in motion, people driving around in cars, watering their lawns, taking their kids to school . . . all of them looking so certain about their place in the world. I kept wondering, "How do people even have the energy to get out of bed, let alone do all this stuff? And why? What's the point of it all?"

By the time I was having physical symptoms, (often feeling like I couldn't breathe and major sciatica), I decided that regardless of my ability to ever make a dime again in my life, what I most needed was peace. I needed to find a way to experience personal peace before I knew how everything was going to work out. And that's when things started to turn around.

With everything that's happening in the world right now . . . the stock market, housing prices, the credit crisis, billion dollar bailouts, inflation, deflation, war . . . a lot of people are experiencing panic.

There's a lot of fear out there, and I get it. I don't think we're supposed to pretend that we're immune to fear, we just need to know how to walk through it, and do our best to restore and maintain a sense of personal peace. Nothing 'out there,' (not even the next presidential candidate or the guru's at the Fed) can give us peace. It really doesn't seem to work that way.

If I'm waiting for external conditions to line up a certain way before I'll consent to feel safe or happy, then I'll probably be waiting a very long time. Alternatively, I believe that as each person, one by one, finds an internal sense of peace and power, it will accidentally seep out into 'the world.'

I don't think that we can solve problems using the same mental processes that created them. We need to find a different perspective, some inspiration.

One of the things I do before I get out of bed in the morning is rehearse my own slightly customized version of the 23rd Psalms:

"The Lord is my Shepherd;

I shall not want.

He maketh me to lie down in green pastures:

He leadeth me beside the still waters.

He restoreth my soul:

He leadeth me in the paths of righteousness for His name' sake."

"Yea, though I walk through the valley of the shadow of debt,

I will fear no evil: For thou art with me; Thy rod and thy staff, they comfort me.

Thou preparest a table before me in the presence of mine economy;

Thou annointest my head with oil; My account runneth over."

"Surely goodness and money shall follow me all the days of my life, and

I will dwell in the House of the Lord forever."

Unfortunately, too many people assume that if there is seller financing involved, there is no underwriting (qualifying) whatsoever . . . that it's a "free-for-all." That's simply not true, unless, of course, you have no idea what you're doing.

Banks have whole departments dedicated to underwriting (i.e. "making sure this loan makes sense and the reward equals the risk"). Do you remember the stack of loan documents you had to sign when you got your last loan? Don't you think there might be a reason for that?

When you're the lender, don't you want water tight documentation so you can sell for minimum discount on the secondary market? How will you feel when you find out that the boiler plate way escrow/title put your seller carry back note together equates into a loss of thousands of dollars when you go to sell your note?

When you're a seller that is thinking about becoming the lender, then you'd better consider thinking like one. Better yet, hire your own underwriting department. And make sure that 'department' knows what's going on in the secondary trust deed market (AKA the discounted note business).

At the very least, educate yourself by reading up on the subject. There's a lot to it, especially if you're thinking that you might want to sell all or part of your first deed of trust or mortgage on the property.

And if you're an agent, pay attention!

Just in the last several days, I have talked to two separate sellers (both with homes over $1mil) who are planning to fire their real estate agent(s) because they are uncomfortable with, and unknowledgeable about, seller financing.

You'll want to read: What You Don't Know About Notes Can Cost You Listings, Sales and Closed Escrows.

With mortgage money harder to get, sellers provide financing

Here's another interview that I really enjoyed. I absolutely love talking about owner financing and helping people explore their options. The above link will take you to the original article on MarketWatch.com (If it doesn't work, read it on my site).

More and more people are wondering about creative exit strategies in today's market, and more and more people are increasingly comfortable leaving their investment money in real estate, even at relatively low returns (6%, 7%, 8%).

News flash: The stock market and banks aren't seen as safe havens any more

Some people have a hard time with seller financing, purporting that it's "just too risky." OK, fair enough, but what course of action doesn't carry with it some risk?

• If you sell and carry paper, there's the risk that you may have to foreclose on a defaulting buyer (to minimize the prospect of foreclosure, consider this land trust strategy)
• If you don't sell, there's the risk that your asset will depreciate, that you're stuck in it over the next 12 years, and that any negative cash flow will eat you alive
• If you sell and put cash under your mattress, there a chance that bed bugs will gnaw it into oblivion (if they don't, then inflation will)
• If you sit and read this post much longer, there's the risk that you are missing the best soap opera of the year

Seller financing is a great strategy. You just need to make sure you're informed and that you have a seller financing professional help you put your deal together. If you don't, you are definitely risking thousands in losses and discounts down the road. Ciao.

It's great to see that the media is increasingly picking up stories about my favorite topics. I had the privilege of being interviewed by IBD recently. You can read the article in today's paper: "Seller Financing Can Seal the Deal in Rough Market."

Here's the first couple paragraphs:

"Owner will finance."

Those three words are coming back in today's real estate market. With financial markets in turmoil and lending very tight, home sellers who own, or have equity and a stable mortgage, are financing deals to lift their property's attractiveness.

"The last time the market was down, creative financing was up," said broker and owner-financing consultant Dawn Rickabaugh of Rickabaugh Realty, in Pasadena, Calif. "We're hitting a time when creative financing is up again."

Liquidity (the ability to readily convert assets into desired benefits) is desperately needed in today's economic climate. I love showing you how you can create your own liquidity. You're not necessarily at the mercy of the market.

And what about superior tax treatment? The installment sale and/or the land trust (sometimes in conjunction with a 1031 exchange) can really save on capital gains, which is always an important conversation. Lots of baby boomers are ripe for seller financing exit strategies in today's market. Let's talk! (In case the above link to IBD doesn't work, you can read the article here)

• Mission Statement
• How I Can Help
  

It's my privilege to speak to the agents at Keller Williams in Pasadena this Friday. The management is very supportive of every possible strategy to help their agents earn more commissions. KW is one of the most supportive and progressive real estate companies I've seen so far.

Let's face it . . . the Real Estate "Warrior" of today needs more tools to get transactions closed. Having an open mind, some flexibility, and learning a little about seller financing and real estate notes can get your escrows closed, and give your seller what they need most.

Do you have a seller stuck on price?

• What if you could show them how to get their price by offering terms?

Is your listing getting ready to expire?

• What if you knew how to approach your seller about carrying paper?

Do you know people who won't sell because "the market's not good?"

• What if you could show them that the installment sale can get them the benefits they're looking for?

Do you know people who worry about capital gains?

• What if you could show them how to defer capital gains without an exchange?

Do you know sellers who just need someone to take over their payments?

• What if you could get your clients out from under their payments without a short sale or foreclosure?

Do you have a buyer who can’t qualify?

• What if you knew how to sell them a home anyway?

Have a property that’s non-conforming?

• What if you didn't worry about a potential buyer to be able to qualify for bank financing?

Is your deal falling apart?

• What if there was a way to keep it together?

So, there are the key points I'll be addressing. I am approached by people every day by phone or email who are hungry for this information, and I'm increasingly needing to find other real estate professionals who know about seller financing, or are at least interested in learning. There are lots of clients to help.

• Real estate brokers, close more transactions!
• How to offer owner financing when there's a mortgage in place