Anyone have experience with selling a note?
What would stop someone from offering owner financing, for the full appraisal price, and then selling the note for cash at a discount?
Any of you have any experience with selling notes?
jpzink
Thousands of times each day this happens. Depends upon how much the owner of the notes will discount his note. I buy notes and can tell you firsthand that a note buyer will pay more for the note if a good down payment has been made. Good luck to you in your investments. If you have a specific question concerning my explanation I will be happy to try to answer it.
Thank you so much for the response.
Let's take this scenario:
I have a home under contract that is appraised at 125,000. I have 105,000 in it.
I put an No Qualifying Owner Financing ad in my local paper. I get someone who is willing to put a 6,000 down payment on it. Their credit is shading and that is the reason they are buying the home this way. What type of discounts would I be willing to give up for a transaction like this?
jpzink, Without sounding evasive, the credit does play a role in determining the purchase price for the note. However, I usually look at the whole picture and try to determine what if everything went wrong, what could I salvage. A seasoned note sells much better. A note as you described will not make you money unless you have a fair credit risk and have an interest rate at around 8-9 %. On a note with fair credit and a 9%APR and a 15 year payout left, I might pay $110,000.This is not engraved in stone by any means and everyone looks at every deal differently. It will be hard to sell the notes right away with a weak buyer and expect to get a good offer. Hope this makes some sense to you. lemjam
Yes, that helps,... thanks so much.
jpzink