If you would like to sell a real estate note in Texas the Kodiak Bear Group can help you to get the most value for your note. Selling a real estate note is usually a straightforward process and can be completed in as little as 14 days. You should know that every note is different and additional items needed can delay turnaround times.
First, let’s give a brief explanation of what a note is. A real estate note is a promissory note that outlines the terms of repayment of a loan. In this case, the loan was for the purchase of real estate.
Now that you know what a real estate note is you need to understand what number the offer will be based on. Additionally, the offer will be different if it is a performing note vs a non-performing note. This can be confusing but not to worry we will make sure you understand what is going on before you make any decisions.
Performing Vs. Non-Performing
A Performing note is a real estate note in which the borrower is performing their side of the contract by making payments on time when they are due. A Non-Performing note is a real estate note in which the borrower is failing to perform their side of the contract and are either behind on payment or they have completely stopped making payments. Depending on which category you fall into will change the value of the note. The reason that the offer will change is that in the case of a performing note the investor that purchases the note is buying the cash flow. In the case of a non-performing note, the investor will need to take further steps to get the note to cashflow again, this means additional cost to the note buyer.
Next, once we have determined if the note is a performing or non-performing note we move on to the terms, the property type, and the borrower. Each of the items mentioned has an important role in the value of the real estate note.
Property Type
The property type is used to describe what kind of real estate the property is. Ex. Is it a Single Family House, Duplex, Mobile home, Vacant Land, etc?
Terms
The terms outlined in the promissory note describe in detail how long the borrower has to pay, How much the borrower needs to pay, and when the borrower needs to pay. This is done using the term length, Interest rate, Down payment, and monthly payments.
Borrower
The borrower is sometimes overlooked as a primary detail that affects the value of the note. The reason the borrower affects the value of the note is that the investor buying the note needs to know that the individual or entity who borrowed money can repay the debt. Do they live at the property, Did they put any skin into the game when they purchased (Down payment), or do they have any credit?
Furthermore, We understand that sellers need to liquidate their notes for various reasons. Below we will touch on a few reasons to sell a real estate note nevertheless it generally comes down to the simple fact that life changes. If we have not learned anything from history is that our lives can change in an instant thus it is always a good idea to find out what your real estate note could be worth. Here are some reasons to sell:
- Fund Retirement / Take a Vacation – If you have created a real estate note you are likely a savvy investor and Savvy investors need to treat themselves as simply as that. Take that Vacation you have always wanted.
- Pay for Medical Expenses – We never want to talk about our health and address medical concerns yet if you have a sudden need for capital to pay for procedures do so with your real estate note. This is why you created the note in the first place!
- Take Advantage of an Investment Opportunity – Previously mentioned you are a Savvy investor and you know your way around a deal. You also know that sometimes you need to act fast, do this by selling your note to get the funds you need.
- Stop Being the Bank! – The average public believes that it is glamorous to be a bank for someone else. You have learned that being the bank means you have to track payments, file necessary documents, and worry if the borrower is going to pay. Stop living like that you can remove that burden from your life.
Finally, Above we covered what makes up the value of a real estate note from the 60-foot view along with covering why a sophisticated investor like yourself may sell a real estate note. Of course, for us to get into every detail of a note would take longer than this web page could hold our ultimate goal is that you now know that you have options. That being said If you want to sell a real estate note in Texas the Kodiak Bear Group can help you to navigate the process.
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