Re: Note For Sale. - Posted by Mark-NC
Posted by Mark-NC on December 19, 2000 at 21:53:18:
Before you go to far with this deal you need to back up a minute.
Is this note going to be in a first or second position?
In most cases a seller would want this note in a second position.
As the deal sits now you will have to have 2 notes. The short term 6 month note that will amount to 19,950.
and the other note of 12,000.
Now bare in mind that if you raise your 10,000. dollar note to 12,000. you will have to raise the sales price that extra 2000. to make the numbers work.
Another thing you have to consider is the seller owns these notes and he is the one that will be selling it.
And as far as getting the 2000 back from the note. Thats not going to happen, because note buyers, buy at a discount. And more than likley you will not be able to take this note to the bank unless you have a relationship with them. Even if you do I doubt if they will buy a second note with no payment history.
And If this Note is in a second position you will be luckey to get 50 cents on the dollar for it. You need to contact a Note buyer to see exactly what you could do. The pricing of it is going to depend on many variables such as credit, rate terms ect. ( try the note forum).
Now I don’t want to burst your bubble. I applaud your enthusiasm. But You need to rethink this thing before you get to deep into it.
What I would suggest is to get the seller more cash by making the 1st note for more and selling it giving him more cash up front and talking him into holding the second for the six months untill you do what ever it is you want to do to the property.
If you write it at a low enough LTV say 70% you probably wont have any trouble getting cash for it from the right note buyer. If the property is actually worth more like you say, bump up the price to cover the discount if you need to, to make the deal work.
Example; Say he sells it to you for 33,000.with a 70% 1st note to be sold at close.
70% LTV = 23,100.
I would guess that if you found the right note buyer and depending on all the variables you could probably get around 20,000. plus or minus for the note.
That being said it may be more atractive to the buyer putting more cash in his pocket.
This is just one way. I am sure others on the board will come up with other suggestions.