As the owner on a note for real estate, those recurring mortgage payments can really come in handy, but they can also mean you have to put up with accounting headaches for a relatively small monthly income. Even if you receive a few thousand dollars a month, the option to have much more than that (in a lump sum) can be very enticing. It can also be financially prudent. When this becomes your situation, it’s time to sell your note. Choosing to sell is not an option to pursue hastily. The choice means you’ll be walking away as the loan owner and cashing out the note for less than face value as you opt to forego future monthly payments. Before you decide to sell, consider the ramifications.
Obviously, you’ll need a buyer before you can sell. You’ll need to go online to locate a suitable purchaser (either a company or an individual); one who has experience buying notes and mortgages. You’ll also need to know the terms of the purchase. You won’t receive the entire amount of the loan because 100% profit for you as the seller would also mean 100% risk for the buyer (no buyer is going to accept those terms). Thus, if they’re interested, the buyer will offer you less than the full amount. This is the point of negotiation where your need for profit is tempered against the purchaser’s tolerance for risk. (If you imagine yourself in the buyer’s shoes, it makes sense.) Once you find an appropriate purchaser, the transaction will net you a sizable chunk of cabbage, which in turn can be used to invest in other business opportunities.
Of course, nobody has a crystal ball and it can be difficult to know if a new business will succeed. But when you do your due diligence, then you’ll be in a position to balance the sale against potential prospects. On the other hand, you might consider selling your note so that you can address pressing financial matters. Things like college tuition, medical bills and other expenses. The loss you take on the sale of your note might pale in comparison to the money you’ll save not having to pay the interest, fees and penalties on current obligations.
Then there’s the hassle factor. Selling your note might help you to retire and pay down current debt, to clear the loan from your accounts, to eliminate the paperwork, to remove the liability and to enjoy some well-deserved peace of mind. If this is the case, it’s the right choice to sell.