How to Structure a Note for Highest Resale value

[Brooke T.]

Hello BP! 

So this is the short version, I purchased a property at a sheriff auction a week ago due to a HOA lien, which was in second place to a very small first mortgage in good standing. Through all my due diligence, I was confident the property was vacant. Turns out its occupied by the loveliest woman who wants nothing more than to stay in her home. I've been trying to help her refi, to redeem her property, but its not going to work through a regular bank, so I'm going to seller-carry it back to her.

IM looking to carry a 80k note on a property worth 265, in its current condition, or 290k totally remodeled. Ive researched the Dodd Frank, and was surprised to find the 30 amortization requirements because I know several investors in my area are not following this rule, Does anyone know how other investors are getting around this? I would think a shorter time frame would make the note more desirable? 

Im looking to keep her monthly payment for principal and interest around 800. Would I be better off, in the resale note market, having a higher interest rate over more time or visa versa? How much does a note buyer care about the credit of the debtor, as hers is great; or is LTV more important?

I Am willing to carry this but will have to do it personally as the current structure and restrictions of my LLC do not allow me to hold notes, and want to set it up to get the best return, should I need to sell it later on.

Not buyers: What are the top few things you look for in buying a note, and what kind of a discount off of face value are you looking for based on the criteria of an individual situation? (best/worst case Discount)?

[Will Fraser]

I love the redemptive and solution-mindset you have here, @Brooke T.!  

The caveat is this:  you bought the property at sheriff's sale . . . i.e. this owner has already not performed on her obligations and lost their house to a foreclosure.  That would mean that you're selling a note with a relatively high risk from the debtor's side.  Then when you consider how to fix the payment at $800 you are going to HAVE to keep it unrenovated . . . which means that your total value is suppressed here.

Perhaps this is one you can carry personally for whatever season it is needed and then pull the "highest profit" lever and position it for the note to be of maximum value when you're not trying to keep payments at a certain level?