630k Worth at 8% cap - Only 525k comp


I have a 4 FAM Condo self managed investment property that is netting me 51k yr. with a potential upside of an additional 7k. I have a couple of creative investors interested in purchasing for 625k NMD. My problem is that in my area i can not get an appraiser to find a comp for more than 525k for this property. I do not want to carry back a note. How would you deal with this? one potential buyer is a current tenant. he only has 25k cash for closing costs and reserves.

Why not structure a note that is attractive to a note investor? You could sell that note at the closing table which is called a simultaneous closing. I can send you an example of a deal I placed with a note buyer off the board if desired.


Will a note investor care about their credit score, appraisal or just cashflow?
and how much ltv will they go up to. I mean I can imagine them giving a better rate for a first than a second, and should they go for a first with a traditional bank and the rest with a note? if their score is low is there a point where it pays for them to go note only?
sorry for my jumbled thoughts… thanks for the input.

Yes the note investor will care about credit, downpayment, appraisal, cashflow, etc. They look at the entire deal much like a bank would. For a sfr I “typically” say that 5% is the bare minimum for a downpayment. If they can put down more that will strengthen your note. For a commercial deal I say 15% is a guideline to use 20% being more appropriate.

One thing you have to understand is that you are gonna take a discount on the note. Note investors buy at discounts and that discount will depend on the structure of the note and the property itself. In my e-mail I sent you there is about 8 things that you should look for in order to maximize the money that goes into your back pocket. Hope this helps a bit.