Sell My Mobile Home Park Note

2013 August 1

Can I sell my mobile home park note? Very likely. While there are some issue with selling a mobile home park note, you nearly always can sell a mobile home park note. One issue that buyers of mobile home park notes might be concerned with is the case where the borrower is a corporation or an LLC where there is no personal guarantee. While this is not usually a deal killer, it could effect the price, particularly if the mobile home park mortgage buyer makes a full offer. This is of much less concern if you want to sell a partial mobile home park note. For pricing information when selling your mobile home park note, see the below general note pricing info. Call today and ask for Ron Stone at 1-877-655-5625. We’re available 7 days a week.

Sell a mobile home park note

How Does Note Discounting Work, aka What will the Discount Be When You Sell a Note?

If you are thinking about selling a note and have done much research, you probably know by now that the industry purchases real estate notes at a discount. You’re probably wondering what the discount on selling a note would be.  Actually, it varies a lot. Below are just some of the variables, although they are big ones.

First, every note buyer has his or her own set of return targets, some significantly higher than the industry average. Secondly, the actual discount rate on a note is set based on the perceived risk of that particular note. Third, there is the pure mathematical calculation for the discount. Allow me to explain.

Let’s use a discount rate of 10% to calculate a purchase price of 3 theoretical notes. Please understand that a 10% discount rate does not mean you take the balance of your note and take 10% off of it for a price. What it means is you use that rate to “discount” the future payments, calculating the net present value of your future income stream. The key thing to remember is the further out you have payments, the larger the discount will be. Below are the three examples. All Notes assume an original balance of $100,000 and that 2 years of payments have been made.

 

Note #1 – 8% interest and an amortization period of 15 years. The payment is $955.65. The current balance is $92,505.69. Applying the discount to the remaining 156 payments, you get (before closing costs which are handled differently by each note buyer) $83,255.70.

 

Note #2 – 8% interest and an amortization period of 30 years. The payment is $733.76. The current balance is $98,259.94. Applying the discount to the remaining 336 payments, you get (before closing costs which are handled differently by each note buyer) $82,634.77. Notice, despite there being a lot more payments, the price is lower.

 

Note #3 – 6% interest and an amortization period of 30 years. The payment is $599.55. The current balance is $97,468.24. Applying the discount to the remaining 336 payments, you get (before closing costs which are handled differently by each note buyer) $67,519.90. That’s a huge difference due simply to the math calculating the discount on a note.

 

 

 

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