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Updated about 9 years ago on . Most recent reply

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22
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Christopher Kelly
  • Residential Real Estate Agent
  • Las Cruces, NM
2
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22
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How do you determine the selling price of a performing note?

Christopher Kelly
  • Residential Real Estate Agent
  • Las Cruces, NM
Posted

What would be a fair value for this note? Original loan amount $106,000, 15 years, 8% interest. Perfect payment history of 31 payments since originated 6/30/13. 3000 square foot home/business located on highway 395 in Red Mountain, California. Zoned res/com. Current balance is $95,489 and has 149 remaining payments.

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Bob Malecki#5 Tax Liens & Mortgage Notes Contributor
  • Investor
  • Kingston, WA
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Bob Malecki#5 Tax Liens & Mortgage Notes Contributor
  • Investor
  • Kingston, WA
Replied

Hi @Christopher Kelly Well, you could also factor in the future value, but to keep it simple, just determine what a fair annualized return would be to a note buyer and price it at that amount. Based on your rate and term, looks like the monthly payment is around $1,013. 

If you were to sell the remaining payments at a 10% yield, then the sale price would be $86,259. The higher the yield, the lower the sale price. Hope this makes sense.

Originally posted by @Christopher Kelly:

What would be a fair value for this note? Original loan amount $106,000, 15 years, 8% interest. Perfect payment history of 31 payments since originated 6/30/13. 3000 square foot home/business located on highway 395 in Red Mountain, California. Zoned res/com. Current balance is $95,489 and has 149 remaining payments.

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