Remember this – if you sell a property and carry back the note – lots of things can happen in the future. But, odds are, that one of the following will probably occur:
1. You will hold the note to its maturity.
2. Your buyer will pay off the note early.
3. Your buyer will stop making payments and you will foreclose.
4. You will sell your note for cash.
3 of these 4 is a good thing; no-one wants to face the stressful situation of a foreclosure. All you can control as a seller of a property is to do enough due diligence so that you feel very comfortable about your buyer. You need to understand his financial situation, his job status, his connection and commitment to the neighborhood, whether extended family may be living close by. The more you know the more comfortable – or uncomfortable – you will become about your potential buyer. You can then measure how strongly you feel about his ability and desire to make the required monthly payment next month, next year, etc.
At some point, your interest in your note will end, and if you have done most things right, hopefully it will end happily. If you never do another note in your lifetime, remember that the one time you do, you want to do it right. Just like your life on earth, you will be “visiting” with your note for a relatively short time. Do your homework, talk to folks like me, and learn from our experience and mistakes.