Newbie question about notes.

5 Replies

Let's say I have a $20,000 note. I want two $10,000 notes. How do I get that? 

I know a little about buying discounted notes. How difficult is it to sell a note for two smaller notes that total the full price? Can you split a note? What's the best way for me to end up with two notes worth $10,000? 

@Bob Jones
You can sell a partial of a note. If you wish to split a note you would have to break it up so one gets the first x payments and another gets the last y payments

It depends on what your trying to do. I do not see how you could split a $20k note and sell it as 2-10k notes - if you were to keep a portion of the note then you have some scenarios

We would definitely need more info to answer properly

@Bob Jones - If the unpaid balance (UPB) of your note is $20K, chances are you'd sell the full note or a partial of the full note for less than UPB. That's fine considering you could then purchase notes with an UPB of $10k at a discount as well.

So if your note is performing, you could:

a) Raise enough capital to purchase a smaller note by selling partial interest in the $20K note. You'd end up with two notes

b) Sell the entire $20k note and purchase two smaller ones.

If it's non-performing I haven't heard of selling a partial in that scenario, although I suppose it can happen, but you could sell the entire note and buy two smaller ones.

Great answers above. It sounds like you're talking about partials. Theoretically you might be able to collateralize the note depending on the circumstances in order to recoup some capital to purchase more notes as well 

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Thanks for the answers. Maybe I should clarify why I'm asking this. I'm trying to figure out what to do if I want to purchase a property with notes, but my notes are more than the amount that I need to pay. 

So, in my simplistic example, I want to pay someone $10,000, and I have a note for $20,000. I'm just trying to work out the best way to handle that situation.

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