How To Generate Seller Financing Notes From Land Records

There are currently 2 different types of Seller Financing Notes, (Loan and Lease Purchase) that exists in Investment Dominator.

Seller Financing Notes for either a Loan or Lease Purchase note can be easily generated from Land Records in Investment Dominator by executing the following instructions.

Note: Please check with LPG Management Staff regarding associated costs for servicing Seller Financing Notes in your Investment Dominator account. 

Step 1) Access The Payment Calculator For A Specific Land Record

To access the ‘Payment Calculator’ for a specific land record, the following must be completed:

      • 1) Access the ‘Selling Stage‘ records
      • 2) Land Record must be in ‘Complete/ Ready To Sell‘ status
      • 3) Select the ‘Option‘ function for the Payment Calculator
      • 4) Select ‘Payment Calculator’ to calculate terms

Access the ‘Payment Calculator’ for a selected land record as shown:

Step 2) Enter Appropriate Seller Financing Term Data

Enter the appropriate Seller Financing Term data based on the ‘Type’ of Seller Financing Note selected.

If generating a Loan Type note populate the ‘Enter Down Payment’, ‘Enter Annual Property Tax’, ‘Enter HOA/POA’, ‘Enter Interest Rate’, ‘Enter Monthly Loan Service Fee’, ‘Enter Term’ fields as appropriate based on agreement with potential buyer.

If generating a Lease Purchase Type note populate the ‘Enter Deposit’, ‘Enter Annual Property Tax’, ‘Enter HOA/POA’, ‘Enter Base Rate’, ‘Enter Monthly Loan Service Fee’, ‘Enter Term’ fields as appropriate based on agreement with potential buyer.

Note: Hover over any [?] associated with a specific field to reveal a detailed explanation on how to best utilize that field in the note transaction.

Once the Seller Financing Term data has been entered press the blue ‘Summarize Terms‘ button to calculate current amounts due; as well as, show monthly Loan or Lease Purchase payments. 

An example of a Loan Type note for a 48 month term is shown as follows:

Step 3) Send Terms Output To Potential Buyer Or Create New Loan

Once terms of either the Loan or Lease Purchase have been calculated from Step 2) this information should can be sent to the potential buyer (in a PDF file format) for agreement by pressing the blue ‘Copy To Clipboard‘ button as shown:

Note: After pressing the blue ‘Copy To Clipboard’ button and showing all information highlighted, to create a PDF file format simply paste the contents of the Clipboard into a Word file and save that word file, (as PDF).

If the terms of either the Loan or Lease Purchase have been approved by the potential buyer then press the blue ‘Create New Loan‘ button as shown:

Step 4) Enter Appropriate Buyer And Verify Loan Information

After pressing the blue ‘Create New Loan’ button from Step 3) the system will migrate to the Notes section of Investment Dominator.

It is important to select the appropriate ‘Primary Buyer’ and/or ‘Secondary Buyer(s) prior to proceeding to the final Step 5) Creating the Note.

Verify all information in ‘Note Information’ section (i.e. Original Sale Amount, Monthly Payment etc.) for accuracy as shown:

Step 5) Create Note In Investment Dominator

Once all note information has been verified in Step 4) proceed with pressing the blue ‘Create Note‘ button to actually generate the Loan or Lease Purchase Note in Investment Dominator as shown:

The newly created Seller Financing Note should appear when accessing the Notes function in Investment Dominator and be in ‘Open’ status as shown:

Notes> Generate Documents

To generate documents for a Note first select one or more Note records from the records table under the ‘Notes‘ tab.

Then click the ‘Generate Documents‘ option:

Click on either the .doc icon or .pdf icons to generate and download the document.

NOTE: Before you generate documents make sure a buyer record is linked to the Note as well as a Property Record is attached.

Payment Calculator>Loans: Terminology and Definitions

Loans

  • Type: You can either choose to calculate a loan with an amortization schedule or a lease-purchase sale which is similar to a rent to own type of sale.
  • Enter In Sale Price: This is the agreed sales price for the property, or in other words, what you are selling the property for.
  • Enter Down Payment: This is the down payment that the buyer puts down at the start of the loan… this amount reduces dollar for dollar the amount financed before the loan is amortized.
  • Enter Annual Property Tax (If applicable): When you owner finance a property, you always want to pay the taxes on behalf of the buyer, therefore the annual property taxes are included in the calculation to determine the monthly payment amounts as well as the four-month tax reserve due at closing.
  • Enter HOA/POA (If applicable): If the property has HOA (Home Owners Association) or POA (Property Owners Association) dues, then you want to enter in the annual amount due. Just like the property taxes, you will want to pay any HOA or POA dues on behalf of the buyer and that is factored into the monthly payment amount.
  • Enter Doc Fee (optional): A doc fee is like an administrative fee to conduct the transaction. You can think of it like the fee you would pay a title company to transact a cash sale. It is paid to you at closing but not applied to the loan balance. It is industry standard to charge $500 for this fee.
  • Enter Interest Rate (optional): The interest rate is used to calculate the interest portion of the payment and it is amortized over the term of the loan. If you are not going to charge an interest rate you can enter in 0 to calculate the loan as a 0% interest loan. Since banks do not typically lend on land the interest rate on land does not follow the rates on houses. It is quite typical to charge a 12.9% rate on land even if financing on houses is at 3%.
  • Enter Monthly Loan Service Fee (optional): The serving fee is an administrative fee for serving the loan. It is factor into the monthly payment however it is an amount in addition to the amounts applied to principal, interest, and impound. Think of this as compensation for the administration effort required from you to manage the loan. It is industry standard to charge $18 to $20 for this fee.
  • Enter Term (optional): This is the number of months the loan is amortized over, or in other words, this is how many months it will take for them to pay off the loan assuming they pay the minimum amount due each month. If you leave this field blank the system will determine the loan term for you. Or you can enter in your own term and the calculator will adjust accordingly. Keep in mind the lower the term the higher the payment will be and the faster the buyer will be paying off the loan.

Loan Summary

  • Sales Price: This is the agreed sales price for the property, in other words, what you are selling the property for.
  • Down Payment: This is the amount that the buyer puts down at the start of the loan which reduces dollar for dollar the amount financed before the loan is amortized.
  • Doc Fee: This is the administrative fee to conduct the transaction. You can think of it like the fee you would pay a title company to transact a cash sale. It is paid to you at closing but not applied to the loan balance.
  • 4 Month Reserve: This is the annual property taxes plus any HOA/ POA annual dues summed up and divided into a monthly impound amount, multiplied by four. The reason we charge this at closing is to accelerate the amounts in the reserve/impound account that are set aside to pay the annual property taxes and HOA/POA dues on the buyer’s behalf in case these amounts fluctuate over the loan term or they are due before the account is fully funding by the monthly inbound amounts. Or in other words, we are over funding the impound reserve account to prevent funding issues that may or may not occur in the future. Any amounts paid into the reserve impound account in excess should be returned to the buyer once the loan has been satisfied and title transferred to the buyer.
  • Total Due Today: This is the total amount the buyer will need to pay at closing in order to purchase the property with the financing.
  • Amount Financed: This is the amount the buyer is financing with you over the term of the loan.
  • Interest Rate: This is the interest rate is used to calculate the interest portion of the payment and it is amortized over the term of the loan.
  • Monthly Payment: This is the base monthly payment which includes the principal and interest portion of the payment.
  • Monthly Impound Amount: This is the annual property taxes and any HOA/POA annual dues split up by month. These funds are set aside to pay the property taxes and any HOA/POA annual dues each year on behalf of the buyer.
  • Loan Term: This is the number of months the loan amortized over. In other words, the number of months it will take the buyer to pay off the loan assuming they only pay the minimum amount due each month on time.
  • Monthly Loan Service Fee: This is an administrative fee for serving the loan.
  • Total Monthly Payment: This is the minimum amount the buyer will need to pay you each month. This amount includes the principal, interest payment, monthly impound amount and loan serving fee that is due each month.
  • Pay Day: This is the day of the month that the payments are due. Typically this is set to 1 which is the 1st day of the month
  • Per Diem: This is the amount owed on a per day basis this is used if someone asks for their payoff amount but they can’t pay for a few days, in that case you would give them their Payoff amount and Per Diem amount and let them know to tack on the Per Diem amount for each day beyond today to the Payoff amount so that they send in the correct amount.
  • Bring Current Amount: This is the amount that the person owes at any given moment it includes any outstanding payments as well as any outstanding fees.

Notes: How To Attach A Property To A Note

There are two ways you can attach a property, or properties to a seller financing Note:

  1. If you create the Note from the ‘Land>Options>Payment Calculator> Create New Loan‘ or ‘Land>Options>Payment Calculator> Create New Lease Purchase‘ then the system will attach the property record that you were on when you opened the Payment Calculator to the New Note record.
  2. If you create the Note from the ‘Notes> New Note‘ screen, then under the ‘Property Information‘ section you will need to manually select the property or properties that you want to attach to the Note.

NOTE: In order to attach a property record to a Note record the Land Record must be in the ‘Complete/ Ready To Sell‘, or ‘SOLD‘ Status.

NOTE: Multiple properties can be attached to a single Note record.

The Status of a Note and How To Update It

The Status of a Note is important because it is what controls the overall state of the Note is as well as properly indexes your records for accurate reporting.

Here is a brief explanation of the built-in Note Statuses and what they mean:

  • Preview: Initially when you create a new Note record from the Payment Calculator the default status of the Note is set to ‘Preview‘ which is a way for you to review and refine the settings of the Note before you actually go live.
  • Open: To active a Note you need to change the status to ‘Open‘.
  • Delinquent: When a Note becomes delinquent the Status changes to ‘Delinquent‘ and then back to ‘Open‘ once the Buyer gets caught back up.
  • Pre-Foreclosure: When you are in the process of taking the property back due to non-payment you can manually move a Note into the ‘Pre-Foreclosure‘ Status.
  • Complete: When a Note term has completed the status of the Note can be updated to the ‘Complete‘ status.
  • Canceled: If someone cancels a Note prior to the term ending, you can update the Status to ‘Canceled‘ which saves the record and payment history of the Note but deactivates in the system.

How To Change The Status of A Note

In order to change the Status of a Note you must first click on the ‘Edit‘ link to the right of the Note record in the Notes overview table that you want to update.

Next, click the ‘Edit Record‘ button located to the top right of the record to open edit mode.

Under the ‘Status‘ field select the status that you would like to move the record into.

NOTE: Selecting the ‘Open‘ status will trigger the system to generate any payments due between the current date and the Note’s origination date so you’ll want to confirm what you have entered under the ‘Origination Date‘ field prior to saving this change.

Click the ‘Save Changes‘ button to save your updates.

Notes: How To Link Buyers To a Loan or Lease Purchase Record

To link buyer(s) to a Loan or Lease Purchase Note first click the ‘Edit‘ link to the right of the Note record that you want to update:

Click the ‘Edit Record‘ option to the top right of the screen:

Navigate to the ‘Buyer Information‘ section and under the ‘Primary Buyer‘ field select a Buyer Contact that you want to attach to the loan.

NOTE: The contact must be entered under the ‘Marketing‘ tab as a ‘Buyer’ record in order to be attached to a Note.

NOTE: You can also attach additional Buyers to the Note under the ‘Secondary Buyer(s)‘ field.

All the buyers that are referenced under the ‘Buyer Information‘ area will be referenced in Note Documents that you generate from the system regarding the Note.

Click the ‘Save Changes‘ at the top right of the record to apply the changes.

How To Make Changes/Edits To A Loan/ Lease Purchase Note or Logged Payments

To make changes to a Loan or Lease Purchase Note first, click on the ‘Edit‘ link to the right of the record that you want to update.

Next, from the Edit screen, click the ‘Edit Record‘ option located at the top right of the page:

This will allow you to edit and save any portion of the Note except for the payment information. If you would like to make changes to any payments that have been logged under the Note, please refer to the ‘How To Edit Payments‘ section below in this article.

To save your changes click the ‘Save Changes‘ button located at the top right of the page:

How To Edit Payments

To make changes to any payments you must first click the ‘Edit Payments‘ link located above and to the right of the ‘Payments‘ section.

To save your changes click the ‘Save Changes‘ link located above and to the right of the ‘Payments‘ section.

IMPORTANT NOTE: We do not recommend that you make changes to the loan terms after payments have already been logged, as this may affect the repayment schedule substantially. In most cases, it is better to create a new Note entirely that contains the new terms so that the system can calculate the payment schedule properly from the beginning of the Note.

Notes: The Difference Between Loans and Lease Purchases

There are a few important differences as well as commonalities between a Land Contract, or what we refer to as a Loan in the Investment Dominator and in Land Profit Generator course, and a Lease Purchase Agreement that you should understand:

  • A Loan Note in the system refers to a Land Contract agreement or Installment Sale agreement between you (the Seller/ Payor) and your Buyer/ Payee. The Agreement follows a traditional amortization schedule through the length of the term and the Buyer/Payee can pay down the balance of the loan by making the scheduled predetermined payments each month, or even by making additional principal-only payments at any time throughout the term in order to accelerate the loan.
  • A Lease Purchase is a lease agreement between you (the Seller/Lessor) that states that you are leasing the lot for a set period of time and that each month a portion of the rent received is earned as a “Rent Credit” that the Buyer/Lessee can use to purchase the lot after the lease term has completed. The amount of Rent Credit that is earned depends on if the payment falls within the first half of the term (calculated at 0.75 of the payment amount) or the second half of the term (calculated at 1.25 of the payment amount).
  • A Loan Note has an Interest Rate that determines an interest payment that you charge each month along with a principal payment which gets applied to the balance of the loan.
  • A Lease Purchase does NOT have an interest rate. It only has a monthly lease payment amount.
  • A Loan Note can have a “Down Payment” applied at closing to lower the amount financed.
  • A Lease Purchase can have a “Deposit” that is added in addition to the lease-purchase term and NOT used as additional rent credit.
  • For both it is customary to charge a monthly serving fee which is in addition to the Loan or Lease payment.
  • For both you do collect a monthly prorated amount for both the Property Taxes, as well as any HOA/POA dues of the property so that you (the Seller/ Owner) can pay these on behalf of the buyer.
  • For both title is transferred only after the terms have been satisfied.
  • For both the buyer is restricted from making material improvements to the lot until after title has officially transferred from you (the Seller) to them (the Buyer).

Disclaimer: Please be advised to have any and all documents provided to you in this program reviewed by an attorney for their validity and feasibility for use in any state. No guarantees of any form are being made by Get In Line – Stay In Line, LLC, Jack Bosch or any other DBA that these documents are valid in the state intended by the user of this material.

How To Create A Loan or Lease Purchase Note

There are two ways you can create a new Loan or Lease Purchase Note in the system:

  1. Navigate to ‘Notes> New Note‘ fill out the form and click the blue ‘Create Note‘ button at the bottom of the screen.

2) You can create a Note from the 2nd step of the ‘Payment Calculator‘ option screen under the ‘Land‘ section of the system. By clicking the blue ‘Create New Loan‘ or ‘Create New Lease Purchase‘ button.

NOTE: If you create the Loan or Lease Purchase Note from this screen the Status of the loan will be set by default to “Preview” and you must manually move the Status to “Open” to activate the Note.

Payment Calculator: How to Calculate Loan/ Lease Terms on the Fly (for Land Investing)

When it comes to marketing land, many investors choose to offer two price points: one for a cash purchase and one for a purchase that includes terms.

Let’s talk about calculating the terms of a sale with seller financing.

Unless you have the Rainman-esque ability to calculate large numbers in your head on the fly, chances are that you will need a little help determining the monthly payments – especially if interest and amortization involved.

The Investment Dominator (with its built-in payment calculator) is here to save the day!

After logging into your Investment Dominator CRM system and clicking on ‘Land‘ tab, make sure that the property you want to calculate terms for is in the “Complete/Ready to Sell” status.

Then, hover over the ‘Options‘ icon on the right-hand side of the record and click the option that says “Payment Calculator“.

NOTE: You can also get to the Payment Calculator under the property record (or Edit screen of the record) by clicking on ‘Options> Payment Calculator‘ from the top menu of the record:

A new window will open that will allow you to enter in information about how you would like to structure the term sale.

NOTE: The ‘Sale Price‘, ‘Down Payment/ Deposit‘, and ‘Annual Property Tax, and HOA/POA‘ fields are REQUIRED to have a value even if that value is 0.

At the top of the screen, you will see a ‘Type‘ option which allows you to calculate either loan terms or lease-purchase terms.

NOTE: Regarding the ‘Deposit‘ for a ‘Lease Purchase’ this is not the same as a down payment for a loan. For a loan when you submit a down payment it will be applied to the Sales Price total which reflects when you ‘Summarize Terms’. While A ‘Lease Purchase’ will apply the optional deposit amount as Rent Credit at the time of signing, or be treated as an additional amount that is not factored into any aspect of the lease purchase.

If you select ‘Lease Purchase’ some things you will notice by default is ‘Charge Deposit’ is set to No and ‘Additional Monthly Fee’ is set to ‘Flat Fee Amount’ set to $0. However, if you were to select ‘Based Rate and Terms’ you are able to charge an ‘Additional Monthly Fee’ which can be automatically calculated by entering a percentage or just a fixed number.

IMPORTANT NOTE: Lease Purchase Notes do not factor in an interest rate; however, the ‘Additional Monthly Fee’ allows you to calculate a Rent Payment that is higher than the amount earned each month as Rent Credit. If you enter in 0 under the ‘Additional Monthly Fee’ field then the monthly Rent Payment will equal the Rent Credit amount.

If you enter in a % value, the amount that is calculated will match the equivalent amount that you would charge for a loan based on an Interest Rate that matches the % value that you enter:

Under ‘Enter Term (optional)’ you can input how many months you want this for. If you leave this field blank the system will automatically assign a term value and will display it on the summary page.

NOTE: The “Taxes and HOA/POA” field refers to the total ANNUAL dues for property taxes and HOA/POA fees for that property. The system will prorate these by month and add them to the total monthly payment due to the buyer.

After you put in the information (both required and optional), click on the button that says “Summarize Terms” and the system summarizes the details of the term.

Click the ‘Back‘ button to go back to the previous screen to make adjustments.

Click the ‘Copy To Clipboard‘ button to copy the contents of the Summary Page to your computer’s clipboard.

Click the ‘Create New Loan‘ or ‘Create New Lease Purchase’ button to set up the note.