Note Scenario - Help! - Posted by Randy M.

Real Estate Investing
#1

Posted by David Alexander on November 10, 2000 at 11:46:20:

You’ll have a hard time selling moving this note to an institution because of the Low balance of the note, 11k face I beleive your saying. Also the face rate at 7.5% will require a serious discount to get any private investor interested.

First place to start is contacting the Noteholder and seeing if they are interested in selling. Otherwise it’s a mute point anyway. You don’t need to know how much you can get for it at first, you only need to know what the absolute best price is you can buy the note for, then tie it up to buy and market it.

Most folks out there take the opposite approach, they shop a note they dont have tied up and then find out the seller is shopping the note around everywhere and the Note industry is very small among the players and institutions. They realize it’s not tied up and dont take you seriously.

David Alexander

#2

Note Scenario - Help! - Posted by Randy M.

Posted by Randy M. on November 10, 2000 at 10:44:06:

Hi. I have a scenario that I’m not familiar with - have never purchased or sold a note before. I found a guy who bought a house a year ago on a Contract for Deed. The house was appraised at $18,600 at that time (have copy). The guy bought it for $17,500 and put down $6,500 - seller carried balance at 7.25%. Buyer has been paying $300/month since then. Apparently, the buyer wants to get away from seller (apparently, seller is doper) and just wants to cash out the seller.

Questions: How much is this note worth? Is this something that a reader here can handle this type of transaction? Can we help the buyer solve his problem?

Seller will probably be interested in selling his note once I can find out how much it’s worth.

I have a copy of the appraisal, a statement from the seller that all payments have been made on time (they weren’t made through an independent party), a copy of the Contract for Deed. Is there anything else I need to make this happen?

Thanks for your responses.

#3

Quote Versus REAL #'s? - Posted by Michael Morrongiello

Posted by Michael Morrongiello on November 12, 2000 at 12:53:19:

Randy:
There are many investors (including ourselves) that would readily purchase a contract for deed instrument that you have outlined regardless of the low interest rate on the financing.

A “quick down and dirty quote” of what we would pay for this contract would require us to know how long ago did this deal close?, how many payments paid to date?, how many left?, what is known about the payors credit and employment?, How is the condition of the property?, its location?, etc. - However please realize that a “quote” is nothing more than an educated guess of what the contract for deed’s cash value may be worth. It is NOT a commitment to purchase and RARELY do files close as they are “quoted”. The reason is that there are a lot of unknowns that have yet to be taken into account.

UNTIL the investor reviews the actual relevant file documenation, payor credit, and gets the above issues addressed it is perilous to establish a price for that contract for deed.

As David mentioned, the contract will have to be discounted in order to cash it out. If the seller also would like to get away from future dealings with this payor, then you just might have a way to “broker” this deal to a funder (we would love to work with you) and make a few $$$ in the process.

To your success,

Michael Morrongiello