Commercial Note Buyers

What is a Commercial Note?

A commercial note is a type of promissory note used to finance commercial real estate transactions. It represents a debt obligation owed by a borrower to the note holder, typically secured by a mortgage on the commercial property or other types of collateral. Commercial notes are often used in owner-financed transactions, where the seller of the property provides financing to the buyer. This type of financing arrangement allows the seller to receive regular payments from the buyer, while the buyer can acquire the property without needing to secure traditional financing.

Commercial Notes

Promissory Notes: Promissory notes are written promises to pay a specified amount of money at a certain time. A mortgage note is a specific type of promissory note secured by a mortgage on the property, often used in commercial real estate transactions.

What Is A Commercial Note Buyer?

  • Office building notes
  • Notes on apartment buildings with more than 4 units
  • Church notes
  • Auto repair shop notes
  • Gas station notes
  • Retail notes
  • Mixed-use property notes (for example, where a retail shop is downstairs and an apartment upstairs)
  • Motel notes
  • Industrial notes

 

Regardless of the structure, commercial note buyers treat these notes differently from other types like residential in that:

  1.  We want to know about the company that resides there.
  2. The appraiser often values the property using a different methodology than with other property types.
  3. The payer on the note is more frequently an LLC or a corporation.
  4. Usage of the property may vary, zoning plays a bigger part, and potential environmental concerns may need to be addressed.
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As with other properties, commercial note buyers like BH will price a note based on risk factors such as:

  • Amount of down payment and equity in the property
  • Payment history
  • Terms of the note
  • Payer credit
  • Property condition and location
  • Miscellaneous factors like whether the building is fully occupied, whether the buyer occupies all or part of the building, and the types of businesses that are there

Why Sell To A Commercial Note Buyer?

You were smart to sell your property using owner financing but may need money now for items like:

  • Buying other properties
  • Investment opportunities
  • Reducing debts
  • Settling an estate

A commercial note sale can provide quick access to capital, and reputable buyers are known for their expertise and efficiency in facilitating the sale process.

You may choose to sell the full note or just part of the note – called a partial. With a partial, you only sell some of the payments instead of all of them. For example, assume that you have a 15-year note with a balance of $325,000. If you only need $100,000, you can choose to sell the next five years of payments and keep the rest of the note. Selling a commercial note with a partial can often be the best of both worlds – less of a discount hit, possibly deferred capital gains taxes, and the opportunity to sell more of the note at a later date.

Why Choose a Reputable Commercial Note Buyer?

When selling a commercial note, it’s essential to choose a reputable commercial note buyer to ensure a smooth and secure transaction. A reputable commercial note buyer will have a transparent and efficient process, with clear timelines for each step of the transaction. They will also have a proven track record of successfully purchasing commercial notes and providing excellent customer service.

Some benefits of working with a reputable commercial note buyer like BH include:

  • Fast and Hassle-Free Closings: A reputable buyer will streamline the process, ensuring that the transaction is completed quickly and without unnecessary complications.

  • Highest Purchase Quotes for Your Note: Experienced buyers can offer more competitive prices for your commercial note, maximizing your return.

  • Professional and Knowledgeable Staff: Working with a team that understands the intricacies of commercial notes ensures that all your questions are answered and any issues are promptly addressed.

  • Secure and Transparent Transaction Process: A reputable buyer will provide a clear and secure process, giving you peace of mind throughout the transaction, and frequently communicating updates to you.

  • Ability to Sell All or Part of Your Note: Flexibility in selling either the entire note or just a portion of it can provide you with the financial liquidity you need while retaining some future income.

By choosing a reputable commercial note buyer, you can ensure that you receive the best possible price for your note and that the transaction is completed quickly and efficiently.

Getting the Best Price for Your Note

Steps In Selling A Commercial Note

  1. Contact a commercial note buyer like BH that is experienced, competent, and honest.  You can dig into this by checking them out on the BBB site, looking for other online reviews on search engine sites, and asking lots of questions of them.
  2. Submit an on-line worksheet or call.  Plan to spend about 10-15 minutes on the phone, as we will have questions about the financials and the property.
  3. Once you and BH have agreed on a price for the note, the due diligence phase begins.  This starts with the commercial note buyer checking the payer’s credit and reviewing the document copies that you have sent.
  4. Next up is that we will order a drive-by appraisal.  Usually, this takes 7-10 days.  On rare occasions, we may request a full commercial appraisal, which can take considerably longer.
  5. Once the appraisal is complete and approved, we will order a title commitment, which takes another 7-10 days.  Whenever possible, we try to use the same title company that you used when you sold the property.
  6. To wrap it all up, we send you closing documents to take assignment of the note.  You sign those and return them back with the original note and deed.
  7. Once received, we record the assignment with the county, and wire the funds to you.

From Step #3 to Step #7, this usually takes 3-5 weeks.