Privately Held Business Notes

A privately held mortgage note or real estate note is a promissory note a buyer of real estate property gives to the seller in exchange for ownership interest in that property. Owner financing has become an established and accepted practice in real estate financing. It can be an attractive and secure investment, with good returns, and has much less volatility than the stock market.

When a seller provides owner financing it gives the buyer and seller much more flexibility in structuring a loan, and eliminates the need for the buyer to go through the hassles of bank qualification.

Types of Mortgage Notes:

Residential Notes Notes that are created buy the sale of residential property, including single-family homes, townhouses, condominiums, and one-to-four family rental units.

Commercial Notes Notes created from the sale of any type of commercial property, including retail, apartments, office and industrial property.

Vacant Land Notes Notes created by the sale of developed or undeveloped land. The Funding Source Network can assist in the sale of private mortgage notes, portfolios of residential or commercial mortgage notes and can also arrange funding at closing, or also known as a simultaneous closing.

Business Notes The Funding Source Network represents funding sources that buy business notes as part of their investment portfolios. Business notes are promissory notes secured by the business. These notes are created when a business owner sells a business using owner financing. Investing in business notes is usually a riskier investment than other types of cash flows, so funding sources normally expect higher yields when funding this type of transaction.

Seven out of ten businesses are sold using this method of financing. It is very difficult to obtain a bank loan to buy a business, because of the high failure rate. Also, most businesses do not own enough assets or collateral to secure a bank loan. Under these circumstances, business owners have no choice, but to owner finance a portion of the sale if they want to sell their business.

Selling a business note or a portion of the business note can provide cash to the former business owner to meet his or her cash flow needs. Many options are available on structuring this type of transaction from selling all, or part of the note; you choose the solution that best meets your requirements.




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