Buy/Sell Notes

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This topic contains 9 replies, has 6 voices, and was last updated by  HeatherMc 1 year, 1 month ago.

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  • #1157


    I saw an advertisement for a seminar on Buying and Selling notes, and was thinking about attending. Does anybody here already do this? If so, would you mind sharing a little on how it works and the pluses/minuses of getting into this?

  • #1169

    Bob Melton

    What city are you in?

    I’m in Tampa, and just got this message:

    TODAY TAMPA REIA @ 6PM: All About Buying n Selling Notes (Paper) with Donna Bauer

    Download JUN Profit Newsletter

  • #1171


    So did you go to this? What did you think?

  • #1175


    Can someone explain briefly what it means to buy or sell notes?

  • #1177


    I’m curious to know also

  • #1180

    Chris Pflum

    This is definitely a niche area of real estate investing, but here is a simple explanation.

    A note is the agreement for someone to repay a certain amount of money, over a specified period of time, at a specified interest rate.

    Let’s say you provide seller financing for the property. The sale price is $100k, 10 year term, 10% interest. Payment is $1321. This is the note.

    10% is a high rate of interest for a real estate note, so you turn around and sell this note to an investor who wants to make a high return on their cash for $100k. Now, the monthly payments go to the investor instead of you, and you walk away with the $100k.

    There are some catches. One, the note is only as good as the person making the payments. If you haven’t set this up for success, nobody is going to buy it for the full face value. In reality, most notes sell for a discount over the face value.

    Next, most note buyers want to see a history of payments before they buy. So the note needs to season at least six months before you can sell it.

    While this is a niche activity in real estate investing, it’s actually something banks do every day on a much larger scale. You can make money buying and selling notes if you know what you’re doing.

  • #1213


    So I could create my own notes and sell those to other investors?

  • #1388


    Still looking for an answer to the above question- what do I do if I want to create a note to sell?

  • #1389

    Chris Pflum

    So there are a couple things to keep in mind when you create a note with the intent to sell.

    1. Quality of the borrower
    2. Strength of the note contract
    3. Seasoning- letting a history of payments develop

    These three things are going to drive your ability to find a buyer for your note. Set up your note with these things in mind.

  • #1393


    I would not ‘create’ notes just to sell them. Unless you are planning on making note buying/selling your core activity, I would only create notes as part of your normal investment activities. Which means, if you want to provide seller financing as part of selling a property, then that is fine.

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