Interest Rates. High, Low, talk to me about how the interest rate affects the sale of my real estate note.

"I love my brother in law. I sold him a piece of property and I have a note with an interest rate of 12.5% This should get top dollar right?"

Another note seller: "I hate my brother in law. I sold him a piece of property and my wife said I couldn't charge anything over 4% interest. She loves her brother. I don't. I assume I am toast as far as selling this note right?"

Interest rates... Like we have learned so far, the interest rate you carry on your real estate note is simply one piece of the big puzzle. There are 12 other factors that determine the "value" of your real estate note to a note buyer.

Obviously, in simple terms: The higher the interest rate you charge on your note the less the potential discount you will incur if you sell your note.

Some people think that a low interest rate note will prevent a note buyer from buying the note.

This is not true.

I have bought many notes with 3 to 5% interest rates.

I have bought many notes with a zero interest rate...

Usually it's a family thing.

A low interest rate simply means that the discount to buy the note will be larger than if the note carried a higher interest rate. The present value of a note with a 9% face rate will always be more than the present value of a note with a 2% face rate...

Moral of the story: A low interest rate note can easily be sold. The note seller will simply be looking at a bigger discount to sell the low rate note (probably should'a thought about that when he was negotiating the terms of the note back when the property sold).

A note with a high interest rate doesn't mean that it's a great note, but everything else being equal, a higher interest rate note is worth more than a lower rate note.