I always tell people inquiring about what terms to offer for owner financing to try not to amortize the note more than 20 years and even shorter would be better. Note buyers discount payments over time and the further out the payments , the larger the discount. However, I also understand the reality of making payments from your buyer palatable. So if you must amortize your owner financed note over 25 or 30 years, put a balloon date in the note of 5 to 7 years. Also, I would not suggest a balloon shorter than 4 years as it makes many mortgage note buyers nervous about whether the borrower can get financing in this lending environment. For more owner financing tips.
Many note holders assume they must sell a real estate note in whole to get some cash for a project or to shed some credit card debt. What most note holders don’t realize is they can sell a part of a note. Selling a partial note can be a great deal. What they would be doing is sell a set number of payments for a lump sum now, while retaining the note after the last payment sold is made. Discounts on this type of purchase can often be considerably less than selling the whole note. Actually, unless otherwise requested, we try to always present a partial note sale as an option. If you don’t need the maximum amount of money now, we recommend you do a partial note sale. I’ve seen a 5 year partial give the seller a very nice lump sum of cash and the note balance at the end of the payment purchase period be very near the full note’s balance at the time of the partial note sale. Call us today to find out how a partial note sale would look. 1-877-655-5625
When selling a real estate note secured by a deed of trust or mortgage, note buyers will ask for proof of note payments, typically the last 12 months. Surprisingly, many note holders mishandle this task and allow their borrower to pay in cash or even deposit cash into their account. They write a receipt and feel that should suffice. Unfortunately, their “seasoned” note will now effectively be an unseasoned note. Don’t make this mistake. Either require your borrower to pay by check or money order. Keep copies of them as well as a log showing the deposit dates. I would also recommend you not cash these checks, simply deposit them. That way if you misplaced a copy, you have a bank statement as a backup as proof of the note payments.