A note buyer takes a note and converts it to cash. Most note buyers are interested in mortgages for properties. If you are currently paying a mortgage, you can sell your mortgage contract to the note buyer, and the latter gives you the remaining cash value of the contract. Your property becomes collateral in the meantime. It is also possible to sell only a partial amount of your note, if you only need that much cash.
You can be certain that the employee contract buyer will be looking outfor the best interests of the company that writes his paycheck. A trulyprofessional note broker, on the other hand, will represent you in thetransaction, with the built-in incentive to offer you the bestcombination price and service.
The Note Buyers Checklist
That’s where we come in. We specialize in the purchase of commercial seller financed real estate notes. As much of our business is as commercial mortgage buyers, we understand the commercial side of this business. This not only means we nearly always close on a note sale we quoted (and at the quote amount unlike many note buyers in this business), but we close very quickly, getting you cash in days instead of weeks or more. Also, unlike residential payment buyers focusing on residential owner financed promissory notes and dabbling in commercial notes, we close and close quickly as we do our own property evaluation initially through the web, and lastly through an onsite visit. One other pretty unique specialty that we have is that we are interest only commercial note buyers so unlike just about every commercial note buyer out there that will not buy a real estate note that in interest only (not amortized), we can help you sell an interest only commercial note as well as an interest only residential note.
Another transaction that note buyers do is buy mortgage contracts from real estate owners who have sold their property to a buyer, where the latter pays a monthly amortization for a span of 10 years or more. The property owner may find himself at a disadvantage in collecting monthly, sometimes delayed, payments. The property owner can sell the note to note buyers, so the latter can carry on the job of collecting from the property buyer. In this case, note buyers buy low and collect the same monthly amortization. So if the face value of the note is $10,000, the note buyer may just buy it at $7,000, but the total mortgage to be collected will still be $10,000. The advantage for the property owner is that he gets cash, while the note buyer will have to collect monthly payments for a few more years.
What Note Buyers Do
Professional note buyers are the eyes and ears for theprivate cashflow industry. They are either employees of larger investment houseswho buy contracts on behalf of institutional investors – insurancecompanies, pension plans, and the like – or they are independentnote brokers. In either case, it is the note buyer’s job to locate andscreen potential sellers, gather documentation, and package it for theinvestor.
If you sold a partial – a pre-determined number of monthlypayments inreturn for certain amount of money you wanted – when the investor hascollected the agreed-upon number of payments, the payments revert toyou. In many cases, a partial sale not only gives you an immediateinfusion of cash, but you can actually net a greater return on the notethan you would have without selling the payments!
The cash flow industry includes investors for nearly every conceivable type of contract or note. In most cases, these investors can either purchase your entire contract or just a partial interest in it to give you a specific sum of money immediately. They accomplish this by discounting the value of the money you are to receive in the future toa present value to earn a certain yield – or return on their money. To put it simply, investors make a profit by giving you fewer dollars today than you would receive by waiting for your future payment or payments. You have use of the money now; the investor does the waiting,but earns a profit when the contract or note is eventually paid in full. This is the time value of money.