You sold a $100,000 land parcel with seller financing. Great move — it helped you sell faster and at a higher price. Now you're collecting $1,189/month for the next 10 years.
But here's the question that keeps nagging you: Is this the best use of your capital?
While that $1,189 check lands in your account each month, you watch other land investors flip 3–4 properties per year, each netting $30,000–50,000 in profit. They're scaling. You're stuck waiting.
After buying over 250 land notes and helping hundreds of land investors exit their seller financing, I'm going to walk you through the complete decision framework: when to hold your note, when to sell it, how to calculate the true value, and how to maximize your outcome.
What Are You Really Holding with a Land Note?
A land note is a debt instrument where the buyer owes you money, secured by the property you sold, paying you monthly principal and interest over a typical 5–20 year term. You hold a lien on the property until paid off.
Example Note
Sounds good, right? But there's more to the story.
Have a land note to sell?
We pay 80 to 90% of balance, performing or not, no seasoning. Written offer in 24 hours.
See What Your Note Is WorthGet a Free QuoteWhat Are the Hidden Costs of Holding a Land Note?
Most land investors only calculate the interest income. They miss these hidden costs:
Opportunity Cost
The return you're NOT earning by having capital tied up in a note instead of deployed in your main business. If your note earns 10% annually ($9,000/year on a $90K note) but you typically make 40% annual returns flipping land, your opportunity cost is $27,000/year. Over 10 years, that's $270,000 in lost profits.
Default Risk
15–25% of seller-financed land deals default. Average time to default: 18–36 months. Average recovery through foreclosure: 60–80% of note value. Time to foreclose and resell: 12–24 months. Legal costs: $3,000–8,000. Total potential loss: $20,000–40,000+.
Management and Mental Bandwidth
Tracking payments monthly, following up on late payments, property tax monitoring, insurance verification, handling buyer requests, annual tax reporting, servicing coordination. Estimated 10–20 hours/year. At $100–200/hour, that's $1,000–4,000/year in hidden cost.
Market Risk
What happens if land values decline 20% in your area? If the buyer defaults and you're stuck with property worth less than the note balance? Your note's value is tied to market conditions you can't control.
Inflation Erosion
At 3% annual inflation, your $1,189 payment has $1,026 in buying power by year 5 (14% loss) and $885 by year 10 (26% loss). Fixed payments lose value every year.
When Should You Hold Your Land Note?
Selling isn't always the answer. Hold your note when:
- You need passive income. If you're retired, semi-retired, or want predictable monthly cash flow.
- The note is short-term. 1–3 years remaining with perfect payment history — just wait it out.
- You can't redeploy capital at higher returns. Don't sell just to have cash sitting idle.
- The buyer is premium quality. Never missed a payment in 3+ years, pays early consistently. Premium borrowers are rare.
- The interest rate is very high. 12–15%+ in a low-rate environment with strong collateral.
When Should You Sell Your Land Note?
- You're an active land investor. If you flip 5+ deals/year and earn 30–50%+ annual returns, your opportunity cost is too high.
- The buyer has payment issues. Missed 1–2 payments, pays late regularly. Sell before default. A late note still sells, but it lands at the low end of our range.
- You need liquidity now. A great acquisition opportunity, personal needs, or diversification.
- The note has a long remaining term. 7–10 years locks up capital for a decade.
- Market conditions favor selling. Note buyers paying premium prices, land values at peak.
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Example 1: Active Land Flipper — Should Sell
vs. about $7,700 in note interest that same year. Decision: Sell.
Example 2: Retiree Needing Income — Should Hold
Monthly income is needed and hard to replace. Low default risk (buyer has paid 5 years already). Decision: Hold.
Example 3: Buyer Struggling — Should Sell
Get out before the default happens. Decision: Sell.
What Determines Your Note's Value?
- Investment-to-Value (ITV). What the note buyer pays ÷ land value. We need 65% or lower.
- Payment history. Never late = premium. Currently late = steep discount.
- Interest rate. 12–15% = better price. 5–7% = lower price.
- Remaining term. 1–3 years = better price. 10+ years = lower price.
- Property quality. Desirable location, good access = better price.
- Documentation quality. Recorded deed of trust + title insurance = better price.
Typical Note Pricing
- Strong notes (30%+ down, perfect history): 88–90% of balance
- Average notes (20% down, good history): 84–87% of balance
- Weaker notes (thin credit, some late pays): 80–83% of balance
- Notes that don't qualify (under 20% down with no buyback, ITV over 65%, no access): priced case by case, or we pass
How Does the Note Selling Process Work?
Step 1: Initial Evaluation (24 hours). You provide note details, property info, and buyer info. We provide a preliminary quote.
Step 2: Due Diligence (2–4 days). We order a title report, property valuation, and payment history verification.
Step 3: Final Offer. We provide a final purchase price, closing timeline, and terms.
Step 4: Closing (about day 7). You sign assignment documents. Buyer is notified. Funds wire to your account.
Total timeline: about 7 days from initial contact to funding.
Can You Sell Part of a Note and Keep Future Payments?
You don't have to sell the entire note. With a partial note sale, you sell the first 36 months of payments and keep everything from month 37 onward. You get immediate cash plus future income, with a lower discount than selling the entire note.
What Are the Two Ways to Sell Your Note to Us?
Option 1: Sell Your Note After Closing
You've already closed and are collecting payments. You decide to exit. We buy the note from you. You get a lump sum, we take over collections.
Option 2: Sell at Closing (Simultaneous Close)
You're selling land with seller financing. We commit to buy the note at closing. You net cash at closing, just like a cash sale. The buyer still gets seller financing terms. Best of both worlds: you sell property faster (due to financing) but get cash.
Real Client Examples
Sarah — Land Flipper
Held $65K land note earning 10%. Active investor doing 8 deals/year. Sold note to us for $52,000 (80%). Used proceeds to buy 2 properties. Flipped both in 5 months. Total profit: $38,000. Made $38K in 5 months vs. $6,500/year holding the note.
Tom — Needed Capital
Held $90K land note. Found $120K acquisition opportunity. Sold note to us for $76,500 (85%). Combined with $43,500 savings to buy the $120K property. Subdivided and sold for $240K. Net profit: $95,000. The note sale made a deal possible that netted more than the note's full balance.
Linda — Risk Management
Buyer had missed 2 payments. Note balance: $55,000. Sold note to us for $44,000 (80%). Avoided foreclosure hassle. Buyer stopped paying 4 months later.
The Bottom Line
Hold your note if: You need passive income, the note is short-term (1–3 years left), you can't earn better returns elsewhere, the buyer is premium quality, or the interest rate is very high (13%+).
Sell your note if: You're an active land investor, you can earn 30%+ returns elsewhere, the note has a long remaining term (7+ years), you need liquidity, the buyer has payment issues, or your opportunity cost is high.
The key question: Is your capital earning its highest and best return in this note, or could it be working harder elsewhere?
For most active land investors, the answer is clear: sell the note, redeploy the capital, and scale your business.
Ready to unlock your capital? Get your note quote in 24 hours.
Get a Free Quote →Frequently Asked Questions
When should I hold my land note instead of selling it?
Hold when you need passive income, the note has 1-3 years left with perfect payment history, you cannot redeploy the capital at higher returns, the buyer is premium quality, or the interest rate is very high.
When should I sell my land note?
Sell when you are an active land investor with high returns elsewhere, the buyer has payment issues, you need liquidity now, or the note has a long remaining term of 7-10 years.
How much do you pay for a land note?
Strong notes (30%+ down, perfect history) get 88-90% of balance, average notes (20% down, good history) get 84-87%, and weaker notes get 80-83%. Notes under 20% down with no buyback, ITV over 65%, or no access are priced case by case, or we pass.
How long does it take to sell a land note?
About 7 days from initial contact to funding. You get a preliminary quote in 24 hours, due diligence takes 2-4 days, then a final offer and closing.
Can I sell only part of my land note?
Yes. With a partial note sale, you sell the first 36 months of payments and keep everything from month 37 onward, with a lower discount than selling the entire note.