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Updated about 6 years ago on . Most recent reply

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825
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278
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Amanda G.
  • Rental Property Investor
  • Augusta, GA
278
Votes |
825
Posts

Selling a partial to cash out of a deal- feasible or desirable?

Amanda G.
  • Rental Property Investor
  • Augusta, GA
Posted

Say an investor has enough cash to buy a SFR outright and sell on an owner-financed note, either in a tax advantaged account or after holding for a year. They want to get all their cash out by selling a partial. How would I calculate that? Here are some typical numbers for my area to use for an example:

purchase $50k, sell at $70k, note at 9.9% interest with a 10% down for 150 payments

Thanks for helping me see the variables, to see if this is a viable option.

Most Popular Reply

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26
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30
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Charles Campbell
  • Rental Property Investor
  • Denton, TX
30
Votes |
26
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Charles Campbell
  • Rental Property Investor
  • Denton, TX
Replied

Hello @Amanda G.,  @Rodel Usam   has laid out the math for the full note, so for the investor to recover their $50K cash, they would have the $7K downpayment, and then could sell a partial of 89 payments to a second investor assuming they require a 12% yield (with some rounding)  for the remaining $43K cash out.  At the end of the partial stream of payments to the second investor, the original investor would then receive the final 61 payments.

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