Creating a Note for an owned property to sell

[Jacob Mueller]

Hey ya'll, heard of a strategy that I wanted to see if you had any thoughts or experience handling. The goal is to generate cash for the principle by creating a promissory note on a piece of property the principle already owns which they then sell. Let's say it's either in 1st, 2nd, or 3rd lien position as well.

1) Has anybody heard of this?
2) In today's environment, what kind of terms would be acceptable?

[Chris Seveney]

Quote from @Jacob Mueller:

Hey ya'll, heard of a strategy that I wanted to see if you had any thoughts or experience handling. The goal is to generate cash for the principle by creating a promissory note on a piece of property the principle already owns which they then sell. Let's say it's either in 1st, 2nd, or 3rd lien position as well.

1) Has anybody heard of this?
2) In today's environment, what kind of terms would be acceptable?

 yep seller financing. We are a note fund and buy hundreds of loans, so its seems odd to tell people i they own a property NOT to seller finance it. 

Why? -

1. Because most do not know how to properly underwrite a borrower

2. You can take the cash now from the sale and invest it elsewhere.

3. Your interest is taxed at ordinary income.

4. If the borrower defaults, you will now have to get legal involved to foreclose on the asset.

Its not for the faint of heart. If you are ok with all the above, sure. But just letting people know what they are getting themselves into.