Commercial Or Land Notes?
Anybody here buying notes on commercial properties or raw land? What additional due diligence should be done when buying such notes? How many are firsts vs seconds/thirds/etc? Is the rate of creation of these notes as infinitesimally close to zero as the SFH note market currently is?
yes, 4e, I would buy such notes. The due diligence is pretty much the same assuming the note is current and has a good payment history. I.e. creditworthy borrower and equity behind you in the property.
If, on the other hand, the note has a troubled payment history and is selling at a discount you want to look more carefully at the quality of the collateral and how complicated you think it might be to foreclose. I especially am looking for paper like that-- in essence I want to cash the bank out of their lawsuits.
If you are buying or selling notes on property that has specific or limited use (raw land has limited use until it is improved), then there are definitely issues. Mostly the same as other deals but clearly less liquidity.
They will appeal the most to someone who understands the use of the property.
John
[addsig]