## The Power and Benefits of Selling a Partial Note

Another opportunity that is not well known is either buying or selling a partial note. When an investor purchases all the remaining payments it is considered a full purchase, but when an investor purchases just a portion of the remaining payments it is considered a partial purchase or partial. In effect it is a 1st on a 1st. Once you have bought one cash flow, itâ€™s easy to go to the performing payor and negotiate the next stream since the paperwork done on the initial deal saved. Typically, the buyer of the partial gets paid before the assignor gets theirs. If the collateral is sold or goes through foreclosure, the remaining balance goes back to the partial note buyer then to the partial seller.

For example, a note has a balance of $100,000 at 10% interest payable in monthly installments of $878 with 360 months (or thirty years) of payments remaining. When the seller sells all 360 remaining payments of $878 to an investor it would be considered a full purchase.

If the investor only sold the first 132 monthly payments of $878 each for $69,900 to a partial investor thus considered a partial sale. Once the partial note buyer received the next 132 months of payments, the note would be reassigned to the investor and the investor would collect the remaining 228 payments (360 total payments less investors partial sale of 132 payments leaves 228 payments remaining to the investor). The back end â€“remaining payments could be placed in the investors Roth IRA.

One can maximize the return on investment by accelerating a settlement. It is not uncommon that a note/mortgage may be paid off early either with a refinance or property sale, the notes paper work would reflect the following. Assume an early payoff after 60 months. The UPB is $97,574. It is split between the investor and the partial note buyer investor. The partial investor receives $47,291 and investor receives $49,283.