The fact that you sold the property just 3 months ago would not prevent me from buying the note.

As a matter of fact, I am happy to buy a note after only 2 payments (as long as everything else makes sense).

What we are talking about in this short blog post is the issue of note "seasoning."

Note seasoning or the period of time the note holder has been receiving payments is a buzz word in the note buying industry.

Many people have heard that you need 6 months seasoning of the note or 12 months seasoning of the note before any note buyer would even consider buying the note.

This is not the case for me.

Seasoning of the note is not that important for me - 1 payment is the minimum seasoning I need. But, note seasoning is just one of 13 factors that go into the desirability and pricing of the note.

Note seasoning for me is NOT a big factor. Down payment from the payor is a MUCH, MUCH, MUCH more important factor than the seasoning of the note.

Note seasoning is important in that it shows the history of the payor making payments on the note.

Let's analyze seasoning a little bit...

Most people assume the longer the seasoning of the note, then the note must be a more desirable note.

Not true.

What's better?

1) A note that has 14 months of seasoning on it. Only 3 payments were paid on time. 2 payments were missed entirely.

OR,

2) A note that only has 6 payments of history, but all were made on time.

Simply based on the seasoning alone, which one is more attractive?

Bottom line: Note seasoning plays just a small role in the pricing of your real estate note. For me, only 1 payment is required to pass the seasoning issue.

There are other note factors far more important than the length of time you have been receving payments on your note.