4 Replies

HI there and thanks for your reply. I'L be caring a note on a property i am selling in NORTHERN CA. Any suggestions on rate and terms for future sale of the note.


The price you will receive for your note will mostly be a function of the down payment, strength of the borrower, interest rate and amortization. I will leave property type, location and condition out since those variables you can't really change but will impact an offer.

If the transaction is subject to Dodd-Frank use a RMLO to complete the transaction. If the note is serviced, have the buyer pay all the monthly fees. Any fee you pay out of your check will be discounted when you sell it unless your servicing is closed. Some investors will only use their own servicer.

Also the sale price needs to equal the true market value at time of sale. Inflating the sale price and giving your borrower less true equity will lower your offers. If you include a balloon payment, make certain it will be easy to refinance when it comes due.

To have much of any interest from note buyers at a good price you want 10% down and an rate north of 7% with an amortization of 10-15 years. If this is commercial property 20% down and bump the rate up to 9-10%; land notes will be tougher.  If your buyer and property qualify for bank financing, you are better off going that route.

Hope that starts you in the right direction. Good luck

Hi SCOTT and thanks for your reply. A little more info.for though. Some acreage with a view

and a mobile home on it no foundation. It's a developers site, with all utilities in for a 3-2, and granny unit.

My agent asked me to think about financing ( a note ),while its being developed. I own it free and clear.


Land notes with someone developing the land would be a tough sale until the construction is finished. This assumes you are in first position and the builder is going out of pocket to develop the parcel. 

If you are subordinating your note to construction financing there would not likely be any buyers for the note. In this case, you would need to wait until the property sold at a profit to get paid off. If the buyer is rolling over their construction loan to a permanent loan you will want to make certain they must pay you off on the conversion.  

Hi SCOTT. That being said. 3 to 5 years max, as I don't really want a long term note.

I just want to move on to another deal. what would be a beneficial arrangement for both of us ???

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