Seller Created Notes - Posted by Reif

Posted by John Behle on March 23, 1999 at 17:08:29:

I don’t sleep much either. I wish it were because of creative ideas about paper. Instead it is a baby that thinks sleep is only good for daytime.

As to your question - don’t make up the note seller’s mind for them. As you mention, putting in the balloon makes the note more valuable, but your seller may have different needs. A partial on an amortized note may be what “jump starts their Greed Glands”. I like to get in and structure the note to best meet their needs and desires. It also builds repoir. They know I am focused on solving their problem. It works well.

Seller Created Notes - Posted by Reif

Posted by Reif on March 21, 1999 at 21:23:22:

My mind is a veritable torrent of thoughts about paper.

Thanks John, I can no longer sleep :slight_smile:

OK, assuming we call the FSBO’s in the paper (especially those that say, “Owner will Carry”), what do we feel is the best strategy?

Do we say to them, “Put a balloon in the note, I can buy it for more money that way” - or do I not mention it, and hope he amortizes it, that way the discount is bigger, leading to more potential profits?

I’m kind of leaning towards former, because I can offer more money for it. The discount will still be be pretty big, although it probably would be tougher to improve the note.

For instance, a 20K note for 360 months with a 5 year balloon at an 18% discount is worth $3200 more than the same note with a full amortization (14.8K vs 11.6K).