For many of you, the real questions might be: *“Why would you want to sell part of a loan?”* or *“Who wants to buy part of loan?”*

Selling part of a loan is known as a “partial.” Let’s look at an example of one and see who comes out the winner. Here are the terms for our example note:

**120 Payments Remaining
**

**$500 Monthly Payments**

It would cost us a total of $16,600 to purchase this note and get it re-performing. If you do the math, that gives us a 35% yield which is pretty common in these scenarios.

Let’s say we offer to sell half of the note to our friend, Bob, at a 12% yield. He gets all the same benefits we do by owning half of the loan, which means he receives half of the payment every month. He’s also protected because we still own the other half of the note, so we are going to make sure it stays performing.

**What would Bob pay us for half of the note?** Bob’s purchase price for the example note would be $17,425 at a 12% yield. He would receive $250 in monthly payments for the remaining 120 months.

**How does it work out for us?** Not bad considering we only paid $16,600 for that note, giving us a small profit immediately. And we continue to receive half of the payments, which equals $250 per month for 10 years.

**Is that a fair deal for Bob?** You decide. I would say a 12% return anywhere is good, especially when it is backed by a piece of real estate. Plus, Bob gets the reassurance that the person that sold it to him owns the other half. If it stops performing, we lose the remaining $250 per month right along with Bob. We will do everything we can to keep that from happening.

As for us being paid $17,425 for the partial sale of the note, that dramatically increases our return and allows us to go purchase another non-performing note and do it again. That is the velocity of money.

Do that a few hundred times with notes you own and that not only is a great return, but it adds up to some real money.