Notes are held for many types of properties. There is real estate, both commercial and private, cars and even businesses. When a buyer buys a property with seller financing, a promissory note or note, is created. Written notes should at least contain the amount of repayment, terms of repayment, amount of interest charged, and terms of default. The monthly payments are then sent to the note holder instead of a traditional bank where many loans are generated. Notes are most commonly created for residential properties for mortgages and trust deeds.
People who own notes may be receiving a monthly allotment of cash from the investment of their note but may begin to feel the burden of carrying a note. Note holders must keep good records of all transactions to include paperwork and accounting. Note holders must also keep up with insurance and IRS regulations. When it is time to sell the note, who will buy the note?
There are many note investors, both private and small and large companies. Many note investors prefer investing in notes because there is collateral behind the note. There is usually a higher yield on their investment too. People seek to buy notes so that they can get monthly cash flow. The face value of the note is the value but it is usually purchased at discount. Also, investors also like that when real estate values go up, so does the note with the direct correlation of the property value. Those private individuals buying notes do not have to qualify to purchase the note, no credit is needed.
Investors may also like investing in notes rather than owning actual real estate. Being a landlord has disadvantages such as dealing with tenants and toilets. Owning the note, you have a secured lien.
When it is time to sell your note, make sure the person or company has the experience, knowledge and finances to purchase your note