NOTE PURCHASE OR SALES PRICE REVIEW

Determining the purchase or sales price of a Note - especially a non-performing Note or a Note with unusual terms - is difficult.   As many of these Notes are sold through bid or auction,  you don't want to pay too much for a Note but if your offer is too low you might not win the bid.   We can help you to determine the maximum amount you should pay for a particular Note while still making your required investment returns.*

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For sellers, we help to determine the minimum amount a buyer should be willing to pay for your particular Note.   We also point out the positive attributes of your Note which buyers will find attractive.  In addition, we can help you determine if your return would be maximized by selling or keeping the Note.

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*Please remember that Notes are not FDIC insured investments and it is possible that you could lose all of the money you've invested in the Note, or more.  While many Notes end up eventually paying in full or reaching a settlement you are happy with, some Notes will never pay anything and you could lose your entire investment plus possible legal or additional costs or fees.   Anyone who tells you that you will always get your investment back on a Note has either never had a bad experience with a Note (which means they haven't had much experience with Notes) or is not being truthful.

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Following is a list of a few of the many items we considered when determining the maximum amount you should pay for a particular note:    

      -   Your risk tolerance 

      -   Your expected return on investment

      -   Your required cash flow (i.e. how much money do you need to get the 1st year, 2nd year, etc.)

      -   Is the Note Performing or Non-Performing

      -   What are the terms of the Note

      -   The credit worthiness of the borrower

      -   The payment history

      -   The interest rate on the Note

      -   What type of collateral, if any, is used to secure the note

      -   The value, location and condition of the underlying collateral (such as real estate)

      -   Whether there are any liens which take priority (i.e. a senior mortgage, property tax liens, judgment liens, etc)

      -   Balances due on senior liens

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Following are some of the questions we get from people who are new to notes. 

What is a "Note"?  "Note" can be used to describe many different types of instruments:  Promissory Note,  Home Equity Line of Credit, Agreement, 1st Mortgage,  2nd Mortgage, Real Estate Note and Seller Carryback Note are some of the words usually used to refer to a loan which is secured by real estate - meaning that if the borrower didn't pay as agreed the holder of the note could take back the real estate as collateral.  Most of these "notes" have a corresponding Deed of Trust or Mortgage which has been filed in the county where the real estate is located.

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Business Note, Commercial Note, Auto Loan, Personal Note, Personal Loan, and Family Loan are some of the words usually used to refer to a loan which does not have Real Estate as security. Sometimes the loan may have some type of collateral used as security - such as equipment, cars, furniture and fixtures - and sometimes there is nothing securing the loan except the borrower's promise to pay.

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What is a "Non-Performing" Note? Most notes have a regular payment schedule (i.e monthly, quarterly, etc.).  If a borrower isn't making the payments,  the note is considered Non-Performing or Defaulted.   Conversely, if the borrower is making their payments as agreed, the note is Performing.

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For more detailed information, please see our FAQ's page or contact us today at Info@OrangeStreetFinancial.com for a free consultation.