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From Hope and Change 2 Dope and Strange
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Here's the deal; I owner finance my old house about four months ago. I went thru my Realtor and Alamo title to do all the paper work. The selling price was $70,000. Buyer paid $10,000. down and is financing the remainder at 7% interest for 8 yrs. So right now he still owes me around $58,110. plus interest for remaining loan term. I have heard of investors that would buy this contract for cash. I not paying any closing again to sell this note. What is the going rate? I am not hurting for money and really don't have to sell but its just a pain in the back side messing with it. This is in Tomball-N/W houston area. Thanks James
 

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I'd be surprised to see 80%. I tried to sell one a few years ago - $35000 at 10% secured by a house valued at almost $70,000. Every shark I talked to started out knocking 30% off the top and discounting from there. I asked them where they could find a 10% loan secured by double the value and the folks had never been a day late on payments and their reply was "That's just the way we do it". I talked them into doing a refi - got a better rate and I got all my money. Good luck.
 

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"Wizards begin as blacksmiths"
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I am not hurting for money and really don't have to sell but its just a pain in the back side messing with it. This is in Tomball-N/W houston area. Thanks James
My real estate attorney does loan servicing. $35.00 activation fee, $10.00 per month. He handles everything for you.

PM if you want his contact info.
 

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The Jammer
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Calculating the current value of that note is a very simple calculation if you have a financial calculator, and know what yield the buyer is trying to achieve.

I plugged your numbers into my calculator, and it looks like the monthly payment, which you didn't give us, is about $818.02/month. There are 92 more payments that a prospective buyer would be buying. Following are the values of your note at several yields to the investor:

yield of 8% value: 56,118
yield of 9% value: 54,222
yield of 10% value: 52415
yield of 11% value: 50,693
yield of 12% value: 49,053
yield of 13% value: 47,489

etc.

When people buy notes, all they are buying is an income stream. That income stream will give a yield to that investor based upon the amount of money they give up in order to generate that income stream.

To make a blanket statement that "they are giving 50 cents or 80 cents on the dollar" is simply not true. If I held a note of $10,000 at a 15% interest rate, I might get someone to pay me over $10,000 for that note. It's all a function of the interest rate and term of your note, vs. what the going rate for yields is at the current time.

Now for your note, which only has 14.3% equity in it, an investor will be wanting a higher yield, because the risk is higher than it would be if there were more equity in the deal.

By the way shoalcat, he does owe you around $58,110 plus interest. However that interest would only be that which accrued since his last payment.

I have taught this subject for 33 years. Check out www.chipmeyers.com

THE JAMMER
 
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