Posted by Bud Branstetter on April 15, 1999 at 24:26:21:
To use your example of an 95,000 note at 8% the p&i would be 690.08. If this were the A credit buyer and the note buyer wanted a 9.5% yield then they would only be willing to pay you $82,900. And that is with you providing the appraisal, title insurance etc.
In order to get more the cash stream needs to be more. This can be done by a higher interest rate, a shorter term, or balloons. The question is what can the buyer afford, then work backward. The lowest return I have seen advertised is just below 8% with an A++ buyer and aged.