$1 Million Note Quandary

Bump! I am curious to see the outcome...

I believe you'd be served well doing your research and offer AFTER you find out what he's willing to let it go for. Ask first, know his range, THEN counter with an offer. You'll never have concern in offending him if you're close. You need an idea of where he's at, before just throwing something out. It may be way off at first offer not knowing what he wants as a payoff.

 

Either way, you're getting a discount and "fair market value" doesn't really apply when you're dealing with Private Money, remember that... You start out wrong, he can always tell you never-mind and cause you to keep paying through the balloon period and with full balance payback. Guys with 1m large to loan out have a knack of finding other ways to deal with their financial issues.

I'd just ask what he has in mind then work from there and make some mathematic sense of it all. Only then should you let any personal feelings come into play. Assuming he takes $750K, I'd gladly take a quick 25% ROI on that $1MM in one instant like this instead of trying to make it some other way. Maybe you know how to make that return year over year plus the 5.5% you pay on, but I sure don't. Also, you'll still have $250K to put to work

Negotiations are still ongoing after a brief period of me figuring out what to offer and where I could get a chunk of money fast. Banks dont want to increase the loan amount on the house due to the economy blah blah blah. I didnt want to lowball so I told him I was thinking 600 maybe 700k, and he wanted 800-850k. It really sounds like 750k would close the deal, but I really feel that 700-725k is the magic number. I gather from what he told me that he is looking for the money to buy some company at a steal of a deal. It sounds like he doesnt need the whole chunk to do the buyout, maybe 400-500k, but I am only interested in closing out the entire note.

Verbal agreement reached today and settled at 725k. Deal will close in 9 days or so. I feel pretty good about the outcome, thanks to everyone for the input and help.

Deal closed today, saved 275k plus interest and feels good to have less debt!

I am glad that worked out real good for you. It also helped him out so it was a good thing for everybody.