Calling the experts for advice on a sale, potential note

[Shadonna N.]

Experts,

Here is the scenario:

Property Location: DC

Tenant has been in place for 8 years.  Not elderly or disabled.  Wants to but the property.

Owner wants to sell

Option 1

Tenant purchases property.  If there is a mortgage on the property can the owner sell the property to the tenant and hold the note?   If the owner does not want to keep the note what is the market for a performing loan and where can it be sold.

[Andy Mirza]

@Shadonna N.Can the tenant get regular financing? If so, that's really the best option for the owner to maximize the net proceeds.

Unless you're in the origination business, you're probably going to have to sell a seller financed note at a discount. Most secondary loan market buyers of performing notes are looking for a yield of 9-12%+, which means that the interest rate on the note has to be 9-12%+ to get par.

If the market in DC is hot and the tenant cannot get regular financing, the best move is to give the tenant notice to move out and put the place on the market.