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All,
I need to create a note backed by real property. I am wondering how to find buyers for a note with the following terms:
$175k
4% interest
180 months
LTV 70%
Never having done this before I don’t know what I don’t know. I am assuming the creation of the note is the easy part and finding a buyer is the hard part. Please advise.
Thanks,
GregBuyers of the note will have to like the property that represents the collateral. They will also have to like the borrower as well.
Thereafter, they will have to like the quality of the paper. Can it be resold if they need to go liquid? And, they will have to like the yield of the note.
Given that the Fed has just increased the Prime Rate to 5.25%, your 4% is not very competitive. Why would someone buy that note and lock in 4% over 15 years? In times of inflation, it’s not good to be a lender because you’ll be paid back with weaker dollars. So if your note has a 4% face value, you’ll probably have to discount it considerably to attract a buyer. They will want at least double the yield, I would guess.
But there may be more to your question about why you need to create this note and subsequently sell it. None of the above may be relevant depending upon what else you may have to add to the story.
Cheers,
Bill
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