8/25/2019- “Why People Sell a Real Estate Note”

If you are in the market to buy a real estate note,  one thing that I always want to know is the reason why the buyer is selling the note.  This question sometimes will provide some important information to see the motivation of the seller along with information about the real estate note and the borrower.

In my experience as a real estate note buyer and seller, most reasons for selling a note can be summed up in just a few reasons.   First,   people sell a note because that is a part of its business model.   There are some persons and businesses who are in the business of selling notes on a regular basis.   If you are a regular note buyer and seller, you know them.   If you are new to real estate notes, you can find these businesses by a simple internet search.

The second reason why people sell a real estate note is this: they want their money now or need the money now.   Life happens all the time, and sometimes, the circumstances of real estate note holders change.   While having a passive cash flow for 20 years or 30 years from a real estate property they owner financed seemed great a few years ago, things change.   It may be that the note holder wants the money now because of something positive in their life such as they want to go on a trip or they want to buy a new car.   Sometimes, a note holder might want their money now for a real estate note because of something sad or difficult in their life.   For example, perhaps they need to have the money for a medical procedure or to take care of a loved one who needs constant medical care.   I suppose reasons for selling a note can be as varied and different.

It may be that when you buy a real estate note from a note holder you are not only acquiring years of cash flow on a great asset, but that you are also helping the note holder to get their money now to fulfill a dream (such as buying a retirement home) or to meet  a need in their life (such as caring for a loved one).   When that happens, it creates a “win-win” situation.     Best wishes in your real estate and wealth pursuits.-      RLW