Buying & Selling Real Estate
by Ken Volkman
Are you confused about what real estate notes are and if they
should be something that's in your portfolio? Simply put, a
real estate note is a promise to pay back a loan. Real estate
notes are the loan documents that are created when you finance
the sale of your house or other type of property. It could be
in the form of a mortgage note, land contract, trust deed or
a contract for deed. What it boils down to is that someone is
making payments on that loan to another party.
Often an individual or business secures a loan from a bank to
pay for a piece of real estate. The bank or mortgage lender
can, at any time, sell this note to another lender. Handling
this sales transaction is a real estate broker.
There are many reasons that real estate notes are bought and
sold. The owner of the note may decide that instead of getting
a set amount of money each month they would really rather have
one lump sum. The note holder may need the money for a new investment
venture, a family situation or just be tired of waiting for
If you have a note to sell the value is determined according
to several factors. These include: Down payment, interest rate,
payment amount, the term or length of the note, the buyers credit
rating and payment history. In addition, the type of the property
and the condition of the property will factor into determining
the value of the note.
Across the country there are thousands of individuals who invest
in notes. But the main buyers and sellers of notes are banks
and pension funds. However, don't let this detour you if you
are interested in investing in real estate notes.
Real Estate has always been a good investment and will no doubt
continue to be a good financial instrument. For individuals
with money to invest, but that do not want the hassles of actually
owning a piece of property, real estate notes may just be the
answer. With privately held real estate notes you can earn anywhere
from 7% to 15% interest on your money.