Discounting commercial paper - Posted by Kristine-CA

Posted by James Strange on March 27, 2003 at 03:21:48:

With only 10% most paper investors will not like this deal. In a small commercial deal like this 30% down is the norm.

You say that it was sold to a convenience store co. Was this a small company or a large chain? If the buyer has very strong credit then note buyers may over look the small down payment.

Someone will buy almost anything if the price is right. To sell this paper at closing my guess is that you would have to give a discount of 25% to 50%.

Commercial property gets apraised just like residental but the lender usually picks the apraiser.

Discounting commercial paper - Posted by Kristine-CA

Posted by Kristine-CA on March 26, 2003 at 20:52:07:

I recently followed a deal of a fellow investor:

Commercial property–Store building and parking lot
Purchase 75K
Clean-up 5K
Re-sale to convenience store co. 220K (six months later)

The terms of the sale were 10% down and the seller carried the other 200K.

If the seller wanted to cash out, what kind of discount would he have to take on that kind of paper? Let’s say it was 8%, 10 year term.

Does anybody buy this kind of paper? With the kind of equity involved here, I am wondering if it is possible to create paper to essentially flip commercial properties. How does commercial property get appraised? I’m sure there were no appraisals involved in this deal.

Any thoughts? Kristine