December is almost always our busiest month. I attribute it to many Note sellers wanting to cash in and take advantage of the low capital gains tax rate of only 15% (which was just extended for another 2 years now). Also there are institutional lenders that want to get those loans off of their books that perhaps are deemed less desirable to them due the borrowers non reporting of their annual financial condition or other factors, we review perhaps 20 prospective loans before conducting due diligence on one. We pay top dollar for the loans we like and usually win the bidding battle when a good one comes along.
This December was no exception to prior years, we had 6 notes that we purchased and closed and I am bidding on a 7th, but it doesn’t look like that one will happen in 2010.
Each note we purchased this month had a late charge provision in it, a due-on-sale clause, as well as the note was either fully or partially amortizing. 5 out of 6 of the notes were on income producing property and the 6th one, even though it was on a house, there was tremendous amount of equity in the house, making the note very attractive.
If you have a note that you are structuring, always consider having a late charge, due on sale clause and having some amortization in the Note, even if you are not thinking about selling it. Later if you do decide to sell it, the note will be much more attractive compared to other notes without those features. Of course the equity or cash down payment is the single most important factor every time making your note salable or not, but don’t forget the other important clauses which are easy to negotiate and insert when the note is written, but impossible to place in the loan later when it comes time to sell it.
If you would like a quote on what your note is worth, please call, fax or e-mail us.