can i sell the note i'm carrying before the balloon hits

Question

bought a fourplex in akron last year, carried the paper at 8% with a 7 year balloon, and i'm already wondering if i could sell this note to someone in year 2 or 3 if i needed the cash. not sure if i can or what i'd realistically get for it that early.

wendy_park48 · Answer

you can sell it, but check whether you included a due-on-sale clause that restricts transfer. some seller-carry notes get drafted without one and it cuts both ways.

year 2 or 3 you're probably looking at 75 to 85 cents on the dollar depending on the buyer's payment history and your LTV at origination, because note buyers price the seasoning hard in the early years.

what was the down payment percentage, because that one number is going to move your discount more than almost anything else?

can i sell the note i'm carrying before the balloon hits

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