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What is a Partial Purchase?

» Posted by on Nov 20, 2012 in Americus Financial News | Comments Off on What is a Partial Purchase?

A partial purchase or a “partial” allows a note holder/seller to sell only part of a note. This maneuver is a transaction in which the owner of a private mortgage note sells less than the entire indebtedness owned by the note holder/seller.  Confusing? It’s actually a pretty simple process and it allows you, the note holder to keep a “residual” interest in the note and avoid taking a substantial discount, if any. Here’s how it works…….
Let’s say you, the note holder need $20,000.00 cash now for a down payment on an investment piece of real estate you wish to buy. Your note (“holding paper” from your last real estate sale)  has a monthly cash stream payment of $486.85 for the next 15 years with a face value of $48,000.00 which is fully amortized at 9% interest. You do not want to sell the whole note due to the fact that your teenage daughter will be starting college in 5 years and you are counting on using that paper asset to fund her education.

Here is the “partial purchase”Americus Financial Group would offer this respective client….

Note holder/seller receives $20,000.00 now for the real estate investment they needed immediate cash for. In five years when their daughter is ready for college the unpaid principal balance owing to them (residual) would still be $38,432.45. The note holder gets $20,000.00 now and in five years the note is assigned back to the note holder/seller with an unpaid principal balance still owing of $38,432.45, allowing them to go forward with funding their daughters college education. Pretty amazing!

We can offer different kinds of partial purchase options based on what your current financial cash requirements are. We are here to help!