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Create And Sell Promissory Notes for Cash

Would You Like Cash For Your Monthly Payments

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Would You Like Cash For Your Monthly Payments?

Welcome to NoteSolutions, a resource for structuring and selling business notes, real estate notes, and other seller financed notes.

NoteSolutions helps people sell seller-financed promissory notes and other payment streams for a lump-sum of cash. If you, or someone you know, receives payments secured by an asset such as a property or a business, those payments can be sold for cash.

For example, if you sold a house, were paid a down payment and currently receive payments for the remainder, I can pay you cash for some or all of those payments.

The idea is similar to buying a house using a bank mortgage.   Later you may receive a notice to send your payments to a different bank.   Banks buy and sell mortgages between each other all the time.

Some prefer to specialize in providing new loans to home buyers.   Other banks would rather service those mortgages and collect the payments. Often people who receive payments on a mortgage, decide that they would rather have a lump sum of cash, instead of payments.   Individuals can sell those payments just like a bank can.

The payments referred to here are documented in the form of a secured promissory note. Theses notes are typically created as a result of seller financing. The notes can be sold through a partial sale or the sale of the entire note balance.

There are many types of notes that can be sold.   In addition to mortgage notes on residential and commercial property, other cash flows that can be sold include land notes, divorce liens, accounts receivable, purchase orders, structured settlements, lottery winnings and private notes held from the sale of a business (business notes).

When you are ready to sell your note or part of it, as a note broker NoteSolutions will do the work to maximize the value of your note.

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How Would You Like To Get Paid?

Not Problem, Solution

You typically have a choice of how you get paid.   By that I mean you may choose to take one payment based on selling the full note. If the note includes a balloon  payment,  you may choose to sell  only the payments prior to the balloon,  or only the balloon itself, and get paid accordingly.

You may choose to get paid for only part of the payments you own, for example, the next 60 payments only.   In that case you would receive a lump sum now, and start receiving the remaining payments thereafter.

You also may choose to sell part of each payment.   For example you could sell 50% of each payment, in return for a lump sum of cash, and continue to be paid the other half of each payment.

The important point to remember is that you do not need to sell your entire note.   Based on your needs, I will help you by structuring a deal that pays you according to your needs.

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Get Started For A Quote

Further Considerations In Selling A Note

All notes when sold are discounted based on the time value of money and the risks taken on by the note buyer.   Simply put, the dollars you have today, will have less buying power in future years.   Even though the payments you would receive from your note, in say ten or fifteen years are the same as today, their value will be less.

An investor buying your note now, will be paying you in today's dollars for payments they will receive in lower valued, future dollars.   Therefore, the note buyer will discount the lump sum of cash they will pay you now.

Keep in mind that by selling your note, you also pass along all associated risks. This includes the risk of late or missed payments, the chance of default by the payor, and a potential foreclosure process that the note buyer would have to take on.

The value of your note depends on a number of factors.   The evaluation will consider the details of how the note itself is structured as well as the corresponding security instrument.

The type of security instrument will vary depending on the type of note.   For example, a real estate note may use a mortgage, deed of trust, contract for deed, or land contract.   For business notes, a Chattel Security Agreement places a lien on the business assets that were sold, and a Uniform Commercial Code Financing Statement(UCC-1) records the seller's lien.

So the way the note and security instrument are written will impact the value of the note.   The credit history of the payor and the payment history on the note itself will be considered. The features of the collateral securing the note are also important factors used to determine the value of your note.

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New Notes

For notes yet to be created, you will find helpful information throughtout this website to assist you in structuring notes. If it would help you to sell all or part of your new note after one payment is received, a simultaneous closing could provide the cash you need.

How Can I Help You Sell Your Note?

If you try to deal with note buyers directly, realize that their goal is not to pay you as much as possible for your note. As a note broker my goal is to optimize the value of your note.

There are no costs for you to pay as part of this process, while recognizing that notes are sold at a discount. I am only compensated by the funding source if a note sale is completed.

Dealing with a note broker means gaining access to specialized skills and resources. Your note is an asset. To make the most of this asset, all aspects need to be presented in the best ways to the right investors, while mitigating the less favorable aspects.

Let me turn an often cumbersome process into a winning solution for you. If you have a note for sale, get started now. Please submit a worksheet, and I will work to provide the best solution for your needs.

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Article Inventory

NoteSolutions has a growing inventory of articles to help you create, manage and sell the secured promissory notes used in seller financing. Click or tap on the categories of articles below to find the specific articles that will help you.

Business Notes
Real Estate Notes
Seller Financing
Promissory Note Guidelines
Mortgage Strategies

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The Process

  1. First, I need information about your note.   Select the link to complete the appropriate worksheet: business notes, real estate notes, simultaneous closings or land notes.
  2. I will contact you to discuss your situation and answer any questions you have.
  3. I will look for the best way to purchase your note, and contact you to present my proposal.
  4. After we agree on the price and terms to purchase your note, you will sign a Note Purchase Agreement to continue the process.
  5. Once I receive a signed Note Purchase Agreement, I will advise you of the paperwork you need to provide in order for the due diligence to proceed.   The required paperwork will vary depending on the type of note.   A copy of the recorded Security Agreement and a copy of the Note are typical documents that I will need.
  6. After all the required documents are received, the due diligence corresponding to your type of note, will be completed.    This includes checking the credit history of the payor, and for real estate notes, a property appraisal and title search.
  7. The final due diligence needs to match closely with the note buyers expectations, based on the information provided along the way by the note seller.   If any discrepancies are found, we will discuss them.   The note purchase price may be reduced accordingly.   A significant discrepancy could result in a purchase offer being withdrawn.   But this is not the plan or desire of the buyer.   Complete, accurate information provided throughout this process, works best for all parties in the transaction.
  8. Based on favorable due diligence, a closing will be scheduled, and at that time you will be paid the agreed upon price.   Unless otherwise agreed, all closing costs are paid by the note purchaser.   This includes the cost of any appraisal, title search and credit check.
  9. From the time that all documents requested in step 5. are received, a closing usually takes less than 3 weeks.
  10. Get started now!

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Frequently Asked Questions

Can I sell my mortgage note?

Yes if you created a mortgage note to sell property you own, the payment(s) you receive can be sold for a lump sum of cash. This type of note is also known as a real estate note. Mortgage notes are sold at a discount based on the risks taken on by the note buyer, and due to inflation which reduces the value of payments received in the future.

Who buys mortgage notes?

Private note buyers and institutional note buyers buy mortgage notes. In each of these categories there is some specialization of sources that buy residential mortgage notes and commercial real estate mortgage notes. In each of those categories there are buyers of performing and nonperforming mortgage notes.

Note brokers facilitate transactions between buyers and sellers and may also buy mortgage notes for their own portfolio. They work to structure the deal to best meet the needs of the note sellers and perform related functions based on their understanding of the note business.

Do I have to sell the entire note?

No, you do not have to sell the entire note, but that may depend on the note buyer. A partial sale of a note can be arranged in various ways, such as selling a specific number of payments, or a percentage of each payment. A note broker can help you determine the structure of the note sale that best meets your needs, and find the note buyers willing to buy your note that way.

Can I sell a note if I created the owner financing myself?

If you created the note to sell property or a business you own, you can sell the note. If you created the note for yourself, but retain the property or the business, you are looking for new financing. Note buyers buy notes, they don't lend money, unless they do so as a separate venture.

How does the process of selling a note work?

Find note buyers or note brokers to work with, and provide information about the note, the collateral and the payor of the note. Note buyers and brokers evaluate the risk of buying the note and if they are interested in making the purchase, will offer one or more quotes.

If a quote is accepted, the note seller signs a Note Purchase Agreement and provides required documents.

The note buyer will complete due diligence including a drive-by appraisal, credit check, title search and review of the documents. Based on favorable due diligence, a closing will be scheduled, and at that time the note seller is paid the agreed upon price.

How long does it usually take to sell a note?

That depends partly on the urgency of the note seller and the complexity of the note and collateral. If sufficient information is provided a quote could be offered within 24 hours. Then it depends on the seller's willingness to accept the quote. Once a quote is accepted, and requested documents are provided, a closing can be done in less then three weeks. At any stage of the process the note seller may take additional time for their role, which lengthens the process. A comercial property note may take longer depending on the details involved.

Do I need the borrower's permission to sell the note?

Yoo do not need the borrower's permission to sell the note, unless the documentation between you and the borrower requires you to do so. This is not a common stipulation.

There could be a right of first refusal (ROFR) in the note. This gives the borrower the right to match an offer that the note holder receives to sell the note. The borrower must be notified of the offer, and based on the ROFR, be given a specified number of days to match the offer. After that time period expires, the note holder can conclude the deal to sell the note to someone else.

Can I sell a commercial mortgage note?

Yes commercial mortgage notes can be sold if you are the note holder, as long as nothing in the documentation prevents a sale. It is a common practice for commercial mortgage notes to be sold. Of course not all note buyers, buy commercial mortgage notes, while some note buyers will specialize in dealing with commercial mortgage notes.

For more information about commercial mortgage notes, take a look at these resources:

Can I sell a nonperforming mortgage note?

Yes nonperforming mortgage notes can be sold. There are buyers of both residential and commercial nonperforming mortgage notes, both first and second liens. Just as performing notes are sold at a discount, nonperforming notes are also sold at a discount, but a larger discount because of the greater risk involved.

There is value in the service provided by buyers of nonperforming notes, as they have the background and resources to handle a problem that the typical property owner does not. Accepting the offer to sell a nonperforming note for the discount, if often the best alternative that the note holder has.

Note buyers that look for nonperforming notes on occupied property often find ways to do a workout, and keep the occupants in the property. Nonperforming notes on unoccupied property are attractive to investors that are more interested in buying the note to acquire the property.

How do I decide whether selling the note is right for me?

Deciding whether selling a promissory note is the right way to go begins with the reason that the note holder pursued a quote to sell the note.

Is there a need for a lump sum of cash instead of the monthly payments? Is there an issue with the process of managing the note and collecting the payments? Or is there an opportunity to use more cash for example, for a vacation, health care or to start a business?

Then you can weigh the benefits of more cash now, versus the same periodic payments moving forward. A partial sale of the note is often the best of both worlds, depending on the note holder's individual circumstances.

REFERRALS = CASH FOR YOU OR YOUR CHARITY

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