Partial note purchase yield question

[Patrick Sears]

Hello,

I had a "math" question of the yield created by selling a partial on an originated note. 

My plan to get involved in notes is to buy for cash a SFH, rehab and then sell on terms to an end buyer (instead of holding to rent). Then I planned on getting my cash back out of the deal by selling a front-end partial at a max of 70% LTV to the note buyer (or whatever the feel comfortable with), which will leave me with just a little left in the deal. This would probably be for a 180-240 mo term. The general terms would be 10% down by home buyer, 600+ credit score, 9-10% interest rate to home buyer, and legally originated by a registered MLO.

My question is this: From my reading of posts and other research, the current yield on something like this a note buyer should expect is around 9-14% or therabouts.  I probably wouldn't sell for over 12%.  However, I notice that when I plug in the numbers the note BUYER ends up with some really high yields, even with no discount off the face value of the note.   For example, if I sold 1/2 the balance of the note, the yield DOUBLES to ~20% on a 10% face rate note for the note buyer (unless of course I'm the note buyer, then it's okay :-)

Pardon my french, but I will be a son of a b*tch before I pay a totally passive note investor that rate of return in this low interest rate enviroment. Especially for a front-ended note with a conservative LTV.

That said, how would I DECREASE the note buyer's return to a more reasonable 12% or so?  Could I sell the note at a PREMIUM to the face value?  Or instead of front-loading the payout, just do a 50/50 partial for the entire term of the note, which would lower the rate of return automatically to the note buyer?

Any other thoughts on this topic?

Thanks!