Here is a hypothetical situation -
I hold a 1st lien position note secured by commercial land. Let's say the land is worth $ 4,000,000 so LTV on note is 50%.
The note is a 5 YR Balloon, I/O due in 5 YRS the amount is for $ 2,000,000 with the note rate at 9% interest only for 5 years.
Interest payments collected monthy would be $ 15,000 with $ 900,000 collected over 60 months and $ 2,000,000 due at month 60.
What could I expect if I wanted to sell this note? Even a ballpark figure is fine. I could also structure the note with different terms and rates to appeal to a broader base of note buyers also.
Any information would be appreciated. Thanks.
Probably 1.5 mil.
There are actually many factors the would be looked at to determine the payoff on such a note but you should be able to get much more than the 1.5 previously discussed if you do things right.
The big thing to look at is going to be down payment. Some of the factors that will effect the note are:
credit of payor
pay history or seasoning
it also depends on who you are selling it to. find a friend or someone who is looking for the cash flow rather than a 'good deal'.
a shrewd business man is a honest business man. bring a note to a note buyer and expect to get a much lower price than someone else.