Posted by Marc Faulkner on August 29, 2009 at 11:11:19:
JB,
There should be no problem in structuring this in a way that would make the note attractive to investors as long as the partner buying out the business and real estate is credit worthy and has enough equity in the deal. I would suggest putting up all of the property and business inventory, assets, good will etc. up for collateral on the the note and giving a credit for the buyers current equity. I would also suggest that you have the buyer put up anything else of value as collateral on the note such as other real estate owned. If there is a way the buyer can come up with additional down payment funds to make the balance to finance and thus the LTV lower, I would also try to make this happen. Make sure there is a personal guarantee and get a co-signer if you can. Structure the term as short term as possible and make the rate slightly above market so that the buyer has an incentive to refinance should the opportunity arise. Make sure to have an attorney draft the documents and close with that attorney or a title company. Get a 3rd. party to service the note so that the pay history can be verified! Season this for as long as possible to maximize your sale price!