Possible Note For Sale?

[Doug Cobb]

Guys, I am not experienced in note selling, so I am going to throw this out there, and ask for ideas and suggestions. I have a 1,800,000.00 note on a 144 space mobile home park that I sold about 5 years ago. Financed for 25 years at 8%. Pmts are 13,983 per month. The park is full, with a waiting list. The thing is a tremendous cash cow. No problems at all. The guy has never been late. I have known him many years, he worked for me and ran the park before I sold it to him. I just sold it on a simple "contract for deed". I put a 5 year call in the contract, so I could re-negotiate the terms or call it due. The guys credit is excellent and so is his wife's, and she would be willing to sign also, but I doubt he could do anything now as tight as the banks are.
I am looking for a way for him to cash me out.
Where are the best places to sell a note, or maybe a better question is how is the best way to sell a note?
I don't have to sell it, and I am happy the get the 8% on my money, but here is the "fly in the ointment". My basis in the park was very low, so I am paying 15% capital gains now. As you know, that will go back to at least 28% next year, and I suspect probably higher. I hate the thoughts of giving the government that kind of money, I would just like to cash out now, pay my 15% and move on. Any ideas,,,,,Like I say, the 5 year date is up so we could re do the note pretty much any way to suite any one. The guy has no problem re- financing and cashing some one out, I just think it would be hard to do right now.

[Greg Gehlen]

Doug,
Definitely understand your aversion to higher capital gains and looking for alternatives before the higher rates kick in. Unfortunately there is not a huge market for larger seller financed notes such as the one that you now hold and because of that you would be looking at a hefty discount if you were to sell it on the secondary market. You may want to look at selling some of the payments (vs. the entire note) as this would allow you take advantage of the lower tax rate and minimize your overall discount. Anyway, hope this helps.
Greg