Note Buying in 2025 – What’s Everyone Seeing?
Member since 2018 · 39 posts · 6 votes
Note Buying in 2025 – What’s Everyone Seeing?
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
9moQuote from @Yael Maroko:
Quote from @William Thompson:
Great question! I’m seeing more performing notes in the mix lately, but the bigger shift is how investors are structuring deals—tax treatment and compliance can swing returns as much as pricing. Curious what others here are adjusting in their underwriting.
Curious to understand what you mean by "tax treatment and compliance".
This is what happens when people use chatgpt to provide responses. You get these types of responses that make zero sense on how tax treatment and compliance impact inventory, underwriting and pricing.
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7 Replies
- 1yWilliam ThompsonBusiness MemberAccountant · Williamstown, NJ · Member since 2025 · 320 posts · 176 votes
Great question! I’m seeing more performing notes in the mix lately, but the bigger shift is how investors are structuring deals—tax treatment and compliance can swing returns as much as pricing. Curious what others here are adjusting in their underwriting.
RE Accounting and Tax Professionals LLC522 Reviews- Investor · Atlanta GA · Member since 2019 · 35 posts · 20 votes1y
Quote from @William Thompson:
Great question! I’m seeing more performing notes in the mix lately, but the bigger shift is how investors are structuring deals—tax treatment and compliance can swing returns as much as pricing. Curious what others here are adjusting in their underwriting.
Curious to understand what you mean by "tax treatment and compliance".
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes9mo
Quote from @Yael Maroko:
Quote from @William Thompson:
Great question! I’m seeing more performing notes in the mix lately, but the bigger shift is how investors are structuring deals—tax treatment and compliance can swing returns as much as pricing. Curious what others here are adjusting in their underwriting.
Curious to understand what you mean by "tax treatment and compliance".
This is what happens when people use chatgpt to provide responses. You get these types of responses that make zero sense on how tax treatment and compliance impact inventory, underwriting and pricing.
7e investments53 Reviews
- 9moDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesSpent the better part of the last 4 months trying to get a handle on the risk adjusted return for our arena; which is the commercial mortgage $1 million - $5 million loan where the borrower doesn’t qualify for institutional financing. Spent a lot of time analyzing the 5 or 6% of our loans that default and we end up foreclosing. The costs are heavily run up by the borrower’s ability to take advantage of (1) judicial states foreclosure laws (2) bankruptcy laws (3) we as lenders having to pay taxes/insurance during borrower’s default (4) legal fees we pay to contest BK filings or other delay tactics (5) deterioration in property since loan origination. Further, a couple of our defaults were due to rental rates for office buildings falling 40 - 60% in those locations.
Quote from @Richard Dickson:
Hey all,
I’ve been focused on performing 1st position residential notes and noticing some shifts—more tech tools for due diligence, tighter compliance, and steady demand for performing paper.
Curious—are you seeing more performing or non-performing inventory right now? And how are you adjusting your pricing or underwriting with the current market?
Looking forward to hearing how others are approaching note buying in 2025.
My conclusion is that we need to adjust the LTV lower on our loans. For loans we originate this is straightforward. For loans we purchase this is more problematic as value of property in defaulted loans has already dropped significantly by the time we enter the picture and the seller is already taking a big “hit” to principal.
Investing is not like most businesses where more revenue seems to always be the goal; sometimes it’s better to hold cash when deals are scarce and prices too high and risk adjusted ROI too low.- Lender · Nationwide · Member since 2018 · 571 posts · 310 votes9moDo you intend to decrease leverage in all states or just judicial ones? Have you ever gotten hit by long redemption periods in states like Kansas or Alabama?
Quote from @Don Konipol:
Spent the better part of the last 4 months trying to get a handle on the risk adjusted return for our arena; which is the commercial mortgage $1 million - $5 million loan where the borrower doesn’t qualify for institutional financing. Spent a lot of time analyzing the 5 or 6% of our loans that default and we end up foreclosing. The costs are heavily run up by the borrower’s ability to take advantage of (1) judicial states foreclosure laws (2) bankruptcy laws (3) we as lenders having to pay taxes/insurance during borrower’s default (4) legal fees we pay to contest BK filings or other delay tactics (5) deterioration in property since loan origination. Further, a couple of our defaults were due to rental rates for office buildings falling 40 - 60% in those locations.Quote from @Richard Dickson:
Hey all,
I’ve been focused on performing 1st position residential notes and noticing some shifts—more tech tools for due diligence, tighter compliance, and steady demand for performing paper.
Curious—are you seeing more performing or non-performing inventory right now? And how are you adjusting your pricing or underwriting with the current market?
Looking forward to hearing how others are approaching note buying in 2025.
My conclusion is that we need to adjust the LTV lower on our loans. For loans we originate this is straightforward. For loans we purchase this is more problematic as value of property in defaulted loans has already dropped significantly by the time we enter the picture and the seller is already taking a big “hit” to principal.
Investing is not like most businesses where more revenue seems to always be the goal; sometimes it’s better to hold cash when deals are scarce and prices too high and risk adjusted ROI too low. - 9moDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesI’ve still got that “under consideration”. We just did a 60% LTV secured by a strong borrower/property - who had to pay HM rates because of no “status” in the U.S. So if the deal is “strong enough” we can still go to our “normal” LTV.
Quote from @Shafi Noss:
Do you intend to decrease leverage in all states or just judicial ones? Have you ever gotten hit by long redemption periods in states like Kansas or Alabama?Quote from @Don Konipol:
Spent the better part of the last 4 months trying to get a handle on the risk adjusted return for our arena; which is the commercial mortgage $1 million - $5 million loan where the borrower doesn’t qualify for institutional financing. Spent a lot of time analyzing the 5 or 6% of our loans that default and we end up foreclosing. The costs are heavily run up by the borrower’s ability to take advantage of (1) judicial states foreclosure laws (2) bankruptcy laws (3) we as lenders having to pay taxes/insurance during borrower’s default (4) legal fees we pay to contest BK filings or other delay tactics (5) deterioration in property since loan origination. Further, a couple of our defaults were due to rental rates for office buildings falling 40 - 60% in those locations.Quote from @Richard Dickson:
Hey all,
I’ve been focused on performing 1st position residential notes and noticing some shifts—more tech tools for due diligence, tighter compliance, and steady demand for performing paper.
Curious—are you seeing more performing or non-performing inventory right now? And how are you adjusting your pricing or underwriting with the current market?
Looking forward to hearing how others are approaching note buying in 2025.
My conclusion is that we need to adjust the LTV lower on our loans. For loans we originate this is straightforward. For loans we purchase this is more problematic as value of property in defaulted loans has already dropped significantly by the time we enter the picture and the seller is already taking a big “hit” to principal.
Investing is not like most businesses where more revenue seems to always be the goal; sometimes it’s better to hold cash when deals are scarce and prices too high and risk adjusted ROI too low.
But most of the deal flow for us are loans with one or more glaring weaknesses. I think we’d probably stay away from most states with “difficult” foreclosure procedures, and it’s not always as simple as judicial vs non judicial, although that of course is the single biggest determinant.
- Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes9mo
We were heavy into NPLs, both commercial and residential, starting in 2007, but we backed off a bit in 2014 when pricing got too high for hit to make sense for our modeling. We're actually back into capital raise mode taking down eight figures to go back in head first into NPLs. We tend to sell the performing loans we either aquire or originate. We don't tend to hold those, but our formal credit and special assets backgrounds allows us to work through the NPLs well. Any performing deals we have we're selling to build the powder to take down NPLs.
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