Buying Newly Created Notes at a Discount – Smart Play or Red Flag?

[Richard Dickson]

d I’ve noticed some sellers offering deep discounts on newly created notes. For example: a $50k note originated just a few months ago being offered at $40k. The notes are “performing,” but in some cases, there’s little or no payment history yet.

On the surface, I understand they may just be looking to free up capital for another deal. But it got me thinking:

- Is this a common and sustainable strategy for sellers?

- Or is it a red flag when someone is consistently offloading brand-new notes at a discount?

- For buyers, what’s the right way to weigh that lack of seasoning against the discount?

Curious how the more experienced investors here evaluate these situations.