Note selling 101...

[Seth C.]

I am interested in buying a property and I can get a note from my brother for the purchase, that he could then sell to get his capital back. I was wondering:

1) What are the terms / characteristics that make a note desirable? I was thinking 30 year amortization at 5%. Would it be better to make it a 10 year balloon? If the note is for 100% purchase plus rehab and then we do an after repair appraisal, is that something worth doing/possible?

2) Other than BP, where are a few good places to sell a note? How long does it usually take?

3) For a 475,000 performing note at 5% with a 30 year amortization, what would one expect to get? Please, do not send me your personal offers right now. I am trying to understand the market and I have been hitting a lot of flakes on BP lately. Unfortunately, this isn't imaginary for me and that causes problems.

Thanks! Seth

[Jay Hinrichs]

well assuming it meets the QM rules for owner occ.. etc.

the scenario you presented is not a very attractive note unless the discount was HUGE

PV is what investor look at.... what rate of return they want and in notes its usually 8 to 12% APR but with 100% leverage most investors will only pay on face value about 60 to 70% LTV ... so right off the top you would be taking a substantial hair cut.

No secret what your trying to do.. but I surmise you will very quickly realize its not realistic .. the discount would be such that it makes it a no go.

If your thinking someone will lock up their money for 10 years at 5% well thats not going to happen especially at 100% LTV...

If you want the house just buy it... and if you need your brother maybe you simply have him co sign .. just a thought..