Posted by DougO(NM) on February 11, 2000 at 09:05:52:
It’s best to work with a local investor on these, unless you’ve met someone outside the area that will do these deals. If you do sell the note, take my advise and don’t think you are done with this deal. If the buyer stops paying, most likely the investor won’t want to deal with getting the home back, fixing if needed, and selling it again. Here’s what I suggest you consider. Never sell the entire note, always leave some of your profit in it, that is security for the investor. That way you can explain I will be interested in the deal so that you have to get paid before I get the rest of my money. Also, if the home is taken back, the investor covers the costs, and adds that to the balance owed them. Sell the house again, and the investor gets enough payments to cover the old balance plus any costs, you get the rest. It works well for both parties, but you have to be willing to step in and do some work to protect your investor. And never forget whose money it is, (theirs until they get it all back)
PS You don’t sell a note saying,its a 7K note for 5K You need to present it showing the yield. For example:
The note you said you have is 42 months of 204.93 (7,000, 12%, 42 months, solve for PMT=204.93)
If you offer the note for sale and would like $5,000 for it, that would be a yeild of about 34% to the investor that bought it. Go to a local RE investor club, ask your attorney or cpa for leads to folks that might be interested. It might be good enough, it might not. If you keep the downpayment and maybe only get $2,000 out of the note, you could bump the yield to the investor, and only sell a part of the note. This would be safer for them and might be a way to get them interested since its a higher yeild and a shorter time period.