A lot of the notes people send me have a small down payment. The buyer put down 5% or 10%, sometimes $2,000 on a $40,000 lot, and the seller now wants cash. In the past I mostly said no to those notes.
Now there is another way. Instead of buying the whole note, I buy a piece of it: the next few years of payments. Here is how that works and what you would get.
Why Do Note Buyers Pass on Low Down Payment Notes?
Because a buyer with little money in the land has little to lose by walking away.
The down payment is the buyer's stake. With 20% or 30% down, a buyer who hits a rough patch fights to keep the land. With 5% down, stopping payments costs them almost nothing, and the note holder is left with a foreclosure and a parcel to resell. That is why our standard is 20% or more down, with at least $10,000. See our note buying criteria for the full list.
What Are My Options if My Buyer Put Down Less Than 20%?
Keep collecting, sell the whole note with a buyback guarantee, or sell a partial.
| Option | What you get | What you take on |
|---|---|---|
| Keep the note | Every payment, over time | All the default risk, and no cash now |
| Sell the whole note with a buyback | One lump sum for the full note | You buy it back if the buyer defaults |
| Sell a partial | Cash now for the next payments, the rest of the note later | No buyback; the note comes back to you after our portion |
A buyback raises the price, but it keeps the risk on you. If the reason you want to sell is to be done with that buyer, a partial is usually the better fit. Buyer under $10,000 down? A partial is the option, because $10,000 is our minimum for a full purchase.
Selling a land note?
We buy land notes with our own money for 80 to 90% of balance. Written offer in 24 hours, close in about 7 days.
Get a Free QuoteWhat Is My Note Worth?How Does a Partial Work on a Low Down Payment Note?
We buy up to 60 of your next payments, priced at an 18% yield, and we never pay more than 40% of the sale price.
We figure the most payments we can buy while staying at or under 40% of what the land sold for, up to 60 payments. You get the cash at closing. We collect those payments. After our last one, the note comes back to you, and you collect the rest, including the remaining balance and any payoff.
The 40% cap is what makes this work. Even if the buyer quits paying, our money is well below what the land is worth, so we do not need a buyback from you. For the basics of how partials are set up, see partial note purchases.
What Would I Get for My Note?
On a $60,000 sale with 5% down, about $23,800 now, and the note back after 41 payments.
Here is the math on a typical low down note.
| Item | Amount |
|---|---|
| Sale price | $60,000 |
| Down payment | $3,000 (5%) |
| Note | $57,000 at 10.9% over 10 years |
| Monthly payment | About $782 |
| 40% cap | $24,000 |
| Payments we buy | The next 41 |
| Cash to you at closing | About $23,800 |
| What comes back to you | Payments 42 to 120, about $44,000 of balance |
You get cash now and still collect about $61,800 in later payments. Your numbers will differ. The note value calculator shows the partial offer when you pick under 20% down with no buyback.
Can I Avoid This on My Next Land Sale?
Yes. Ask for at least 20% down, and at least $10,000, and the whole note qualifies.
In my experience, sellers take low down payments to move a parcel faster, then find out the note is hard to sell. If you plan to sell your notes, set your terms for it from day one. Offering seller financing from day one and the seller financing credit matrix show the down payment to ask for at each credit score.
How Do I Get an Offer on a Partial?
Send the note details and you get a written bid within 24 hours.
Send the sale price, down payment, balance, rate, payment, payments left, and a payment history. Once the documents are in, closing takes about 7 days. You can get a number first with the note value calculator.
Want a written offer from the company that will wire the money?
Get a Free Quote →Frequently Asked Questions
Can I sell a land note if my buyer put down less than 20%?
Yes. With a buyback guarantee from you, we can price the whole note. Without one, we buy a partial: up to 60 of the next payments, priced at an 18% yield and capped at 40% of the sale price.
Can I sell a note with less than $10,000 down?
Not as a full purchase, because $10,000 is our minimum down payment for that. We can still buy a partial of the next payments on the same terms: up to 60 payments, an 18% yield, and a cap of 40% of the sale price.
What happens after the partial ends?
The note comes back to you. You collect every payment after our last one, plus the remaining balance and any payoff.
What if the buyer pays off the note during the partial?
We receive the payoff up to the amount still owed to us. Anything left after our portion is satisfied goes to you.