We have seen a ton of interesting deals over the years. And we often joke that all notes have their quirks — and that’s true and not always a bad thing.
Sometimes it’s a unique note that takes an investor who is okay with its location, type, and story. Other times it’s family tension, a death, or missing paperwork.
While this Texas note had some quirks, it was by far our smoothest path to closing we had in 2025.
The Details – The Single-Family Home Note in Dallas
The Seller purchased the original note and was its “second” holder. We say ‘second’ in quotations because, while it was in their possession, they transferred it a few times between business entities.
- Sales Date: June 2021
- Sales Price: $183,600
- Starting Balance: $183,600
- Term: 360
- Payments Made: 54
- Payments Remaining: 306
- Interest Rate: 8.75%
- Monthly Payment: $1,445.35
- Unpaid Balance: $176,616
- Loan-to-Value: 95% to Sales Price and 72% to Current Value (Assessed at $245,000)
The seasoning (length of payment history) and interest rate were great to see. However, the lack of a down payment made for a higher LTV than we typically prefer. However, that was later off-set with the BPO and Assessed Value coming in higher at $245,000. While it had some positives, we worked with an outside investor to provide the best pricing, even minus our referral fee, compared to what we would purchase for using in-house funds.
Another plus? Texas! Texas is a top-producing note state with over 25% of the newly created seller financed notes. They also have a nice set of documentation including the Warranty Deed with Vendor’s Lien, Deed of Trust and Promissory Note — all which this Seller had readily available for review.
Smooth Sailing – with Some Small Swells
This deal came with a knowledgeable seller who had all documents at the ready, was quick to provide information and sign forms, and understood the note-selling process.
We also worked with an institutional buyer, First National Acceptance Company, whose team was quick and easy to work with.
Because of that, it was smooth sailing and a relatively quick close within a month from signing the deal. Even with its quirks…
Multiple Allonges
The Seller was the second, third, and fourth holder of the note.
The Seller transferred the note (via Allonges and recorded Assignments) to different entities (mainly variations of the same company name). Luckily, those transfers were correctly documented with a trail of paperwork that made it easy to determine the current Note Holder that was insurable by a title company.
Monthly Payment Bundled
The Borrower was always timely. While we prefer to see a note third-party serviced, the Seller kept detailed records and had proof of payments available.
However, the Borrower paid for this note and another note held by the same Seller in the same monthly payment. Because of this, we required a copy of that other note and the payment history to verify the extra amount was for a different note (rather than extra principal payments). This was also verified with the Borrower through a Purchaser Interview.
Who is Signing?
An entity held this Dallas Note and was in good standing with the State of Texas. And while the individual we worked with was part of the entity, they were not among the two individuals with signing authority.
Additionally, it was preferred that only one individual be present for the mobile notary to sign the closing package. We were able to obtain a signed Unanimous Written Consent allowing only one signer.
Selling Notes During the Holidays
While four weeks is within the normal range for closing deals (that don’t have major hiccups), it could have been even faster if it were a different time of year.
This deal came to us right before the Thanksgiving Holiday. Many of the required due diligence items, such as BPO and underwriting, were delayed by holiday office closures.
However, even with those items, it was smooth sailing and very little stress or back-and-forth. So while no note is “perfect”, this one came pretty close!
Looking to dive into the world of note investing or note brokering? Join us for our Calculating Notes Master Class and Marketing for Notes Master Class. Happy Note Investing!
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