How Does Owner Financing Work

The Cash-Back Car: Monetizing Electric Vehicles

While the market for electric vehicles is heating up, with waiting lists for both the Nissan Leaf and the Chevy Volt and startup companies like Tesla , Arcimoto , and Coda Automotive upping their games, some industry watchers still wonder whether electric vehicles will ever become a significant part of the auto market.

But what if you could earn $1,000 a year with your electric vehicle, netting $440 after your fill-up costs? Would that be enough of an incentive to compensate for higher upfront costs and range anxiety?

For years, EV boosters have mulled the possibility of all those car batteries being used to store energy. In addition to drawing electricity, plugged-in cars would also be able to send electricity stored in their batteries back into the grid as needed, acting like tiny power plants.

The grid needs short-, medium-, and longer-term storage to run smoothly , and car batteries could most easily meet the short-term need, a process called frequency regulation. And as we ramp up our percentage of renewable energy from variable sources like wind and solar, the need for this service is growing. But why would car owners allow their cars to be used in this way? Enter the cash-back car.

The so-called vehicle-to-grid model, or V2G, has been a pet project of Dr. Willett Kempton ’s since 1997. In an article published that year by Kempton and colleague Steven Letendre, they laid out the economics, the electric engineering, and how to calculate earnings.

Kempton then contacted his regional transmission organization (RTO), PJM Interconnection , which manages wholesale electricity in 13 states and the District of Columbia, and convinced it to make it possible to pay customers for providing this service.

For the last three years, Kempton has operated a pilot project at the University of Delaware, partnering with PJM and a couple of utilities, in which seven electric cars interact with the grid and receive monthly payments.

The service they provide is actually higher quality frequency regulation than the way grid operators have provided that service traditionally: by ramping extra “peaker” power plants up and down, which wastes electricity. It also takes the plants several minutes to ramp up or down. By contrast, batteries in the cars can deliver that service within seconds, making it a more valuable tool. “We’re providing a more valuable and responsive service,” said Kempton.

Federal Energy Regulatory Commission (FERC) Chairman Jon Wellinghoff agrees and believes that value should be compensated with higher payments than the peaker plants receive. He proposed a rule to that effect in February and expects it to become official within months.

How Does a Seller-Financed Home Sale Work? | Bad Credit Mortgage ...

 Years. However, since the mortgage crisis, I receive phone calls nearly every day from people wanting to buy houses using this strategy.

A seller-financed home sale offers benefits to both buyers and sellers. Buyers are able to purchase a home while engaging in credit repair strategies. Sellers are able to obtain a higher asking price because they carry substantial risk if the deal goes bad.

Essentially, sellers act as the mortgage financier. This doesn’t mean sellers hand over cash to buyers. Instead, they provide credit so the buyer can purchase the property by making payments directly to the seller.

Seller carry back mortgages are not intended to extend for 15 or 30 years like conventional home loans. While the purchase price is amortized in the same manner as banks do, buyers need to work toward restoring credit to qualify for bank financing within a specific timeframe.

The owner will carry home sales I have participated in have extended between 3 and 5 years. Afterward, buyers refinance mortgages through a financial institution to pay off remaining balances.

I require buyers to provide at least 10-percent down payment and assess interest just as a bank would. Sellers are required to abide by state usury laws and prohibited from charging higher interest rates than banks. Buyers should have seller-financed real estate contracts reviewed by a lawyer to ensure compliance and proper recording of property deeds.

Seller-financed loans should be executed with legally-binding contracts of a promissory note and recorded mortgage. Mortgage notes need to include the purchase price, interest rate, down payment amount, monthly installment amount, and default clause. Sellers can initiate foreclosure proceedings if buyers default on loan payments and the default clause outlines the terms that constitute default.

The majority of investors I know only enter into seller-financed home sales when they own the property outright. I follow this protocol as well because banks rarely offer financing when additional risks are attached to the property.

Some investors will engage in this strategy if the buyer’s down payment covers the outstanding balance they owe on the loan. For example, if the seller owes $15,000 on the mortgage note they will require buyers to provide a $15,000 down payment. Funds are used to pay off the note and the trust deed transfer is recorded through the County Recorder’s office.

How to Buy the Home You Want, for the Best Price, in Any Market

Tips and traps when mortgage hunting

Engineering and contracting

How to Sell a House Fast in a Slow Real Estate Market, A 30-Day Plan for Motivated Sellers

Financing Real Estate Investments for Dummies