Note Investing ROI Calculator?

Investor · SF Bay Area · Member since 2016 · 78 posts · 16 votes

Does anyone have any recommendations for, or can send over, an ROI calculator I can use to evaluate tapes effectively?

I understand that different states have different fees and whatnot, but I'm just looking for something that has worked for other people and/or for an excel calculator I can work off of.

Thanks in advance

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Kimberly Banks Fawcett

Investor · Orange County, CA · Member since 2014 · 19 posts · 44 votes

10y

Hi Gary.

My recommendation would be to never use someone else's ROI calculator. Your understanding of all the nuances in note investing will never expand like it will when you think about it step-by-step-by-step with real dollars and cents in play.

I think "what do I need to include in my ROI calculator?" would be a much more useful discussion for your learning process. So much so that I will start you off!

One of the things that I think many NPN investors forget to include are the property taxes that will be incurred during the workout process. If you are in a long foreclosure state and your holding period runs from 12-18 months, that can be a big number to absorb so it better be in there.

I hope this helps. Feel free to reach out if you'd like to discuss it further.

Kimberly Banks Fawcett
Inspired Capital Group

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Pari Thiagasundaram
Lender · Fremont, CA · Member since 2014 · 292 posts · 102 votes
10y
Not sure if i understand correctly. I am using 10bii calculator for calculating my return on the performing notes side.
1 Reply
Gary A.
OP
Investor · SF Bay Area · Member since 2016 · 78 posts · 16 votes
10y
Good question - I should have clarified.
I'm talking about an excel spreadsheet that you can reference for all your due diligence. It might include formulas or other calculations. It helps to list out your costs and projected returns in a spreadsheet.
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Wayne Smith
Information Technology · Wilmington, DE · Member since 2014 · 31 posts · 7 votes
10y
@Gary A. look on www.youtube.com or Google / Apple App Store for Terry Bontemps Note Calculator....
Take care,
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Gary A.
OP
Investor · SF Bay Area · Member since 2016 · 78 posts · 16 votes
10y
I have an android, unfortunately.
Anyone else have recommendations/suggestions?
0 Reply
Kimberly Banks Fawcett
Investor · Orange County, CA · Member since 2014 · 19 posts · 44 votes
10y
Hi Gary.
My recommendation would be to never use someone else's ROI calculator. Your understanding of all the nuances in note investing will never expand like it will when you think about it step-by-step-by-step with real dollars and cents in play.
I think "what do I need to include in my ROI calculator?" would be a much more useful discussion for your learning process. So much so that I will start you off!
One of the things that I think many NPN investors forget to include are the property taxes that will be incurred during the workout process. If you are in a long foreclosure state and your holding period runs from 12-18 months, that can be a big number to absorb so it better be in there.
I hope this helps. Feel free to reach out if you'd like to discuss it further.
Kimberly Banks Fawcett
Inspired Capital Group
8 Reply
Nathan Turner
Investor · Saint Bruno De Montarville, Québec · Member since 2016 · 49 posts · 35 votes
10y
@Gary A. I totally agree with @Kimberly Banks Fawcett. We actually compared our own spreadsheets a week or so ago. Kimberly's is very similar to mine but with our own personalized touch and slightly different things we consider and care about. Starting with a template might be good just to see what one looks like but building your own is well worth the effort.
To go off of what Kimberly said, my first version included a 6% commission for a realtor when the property is sold (if that's the route it goes) and I changed it out for a flat fee which is more common with the property values I deal with. It may not seem like much but accuracy is key!
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Gary A.
OP
Investor · SF Bay Area · Member since 2016 · 78 posts · 16 votes
10y
@Kimberly Banks Fawcett Thank you for the insight. I should have been more clear in asking for a certain type of ROI calculator. It's definitely true that it matters what sort of strategy you have and what your end goals are. These change your ROI calculator. I appreciate the insight you've provided.
@Nathan Turner Thanks fore the tip. Referencing my message above, I'm looking for an ROI calculator for Junior Liens that will get me chunks of cash instead of working towards streams of cash. Although I will accept both, depending on the situation.
If there's any sort of calculator that you can provide for Non-Performing Junior Liens that might help? This would clearly be as a template with which I can work off of. Anything helps. Thanks again, for your insight
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Joe Tomko
Specialist · Easton, PA · Member since 2018 · 137 posts · 48 votes
8y
Gary, did you get guidance on what things you account for?
I just signed up to train with Scott Carson and am still learning what I can before training starts next month. While I see the value in creating the spreadsheet myself and going through the exercise and creating my formulas, what are the things I need to have in my calculator? I'm guessing:
Purchase price
Remaining term
UPB
Original value
Property value
Attorney fees (how do i know more many hours or how much money to budget for?)
Realtor fees
Servicing
Any set up or transfer fees
What else?
I'm looking to buy and rehab some notes whereby I may sell some and keep most others for cash flow. These will likely be firsts, residential NPLs. Eventually, I want to learn it all, performing, non, firsts, seconds, residential, commercial, and more. I want at least $100k/year before I can quit my job, which is my ultimate goal.
Joe
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
8y
Gary A. I agree with Kimberly Banks Fawcett that never ever take someone’s calculator as 1. they can be complex and may not be correct. 2. there are specific inputs in them that if not updated can throw off your returns. 3. People solve for different things. I know of some who solve for ROI and annualize it, some solve for CoC and some solve for yield (IRR). You can have someone show you how to set one up but you will want to build it yourself.
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Bill McCafferty
Real Estate Investor · Coatesville, PA 19320 · Member since 2011 · 108 posts · 178 votes
8y
10 bii Financial Calculator is hands down the best. Download the App.
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Bill McCafferty
Real Estate Investor · Coatesville, PA 19320 · Member since 2011 · 108 posts · 178 votes
8y
10 bii Financial Calculator.
2 Reply
Brian Bradley
Attorney · Wilsonville, OR · Member since 2017 · 504 posts · 411 votes
8y
It is interesting reading your guys reply to @Gary A. I never once heard him say give me your calculator to use. But rather he is trying to put all his information he is learning into a ROI calculator, and like any profession law or real estate, medicine, he is new to this and he is looking for help or a template on how to actually do this so he does not create something horribly wrong and loose his investment. In the legal field we share legal forms with other professionals we know and vet all the time. I wish I could help Gary, but I am new to notes and building the ROI calculator myself. Their really is no such thing in help I am finding in the note investing game unless you personally reach out to some note investors and ask them if they don't mind mentoring you, having you take a JV position, and or even shadowing them on a few of their deals to learn. but simply asking on these forums will not help you understand what to actually input. You will find most tight lipped, and then a few really good guys and gals who don't mind helping a newbie. But good for you to think about the next stage of evaluating notes to be successful. I find most of these peoples replies to be obvious answers. Obviously every market and investors strategy is different. That was not his question. He is now trying to accurately place what he has learned into a ROI calculator so he can properly invest. Hit me up on IM Gary in a few months after I get a few notes under my belt and my own ROI calculator and we can compare. Its a lot different then investing in physical property and getting info in this game. I have found a few good mentors that I am working with. As well as great books on investing in notes and podcasts. Check out the book investing in notes, and look for podcasts for note investing. Great free information.
5 Reply
Brian Bradley
Attorney · Wilsonville, OR · Member since 2017 · 504 posts · 411 votes
8y
@Gary A. sorry. the book is Investing in Debt by Jimmy Napier. I wrote a forum post on books on investing in notes Check it out. And the note investing book that is coming on BP. And some podcast to listen to are The NoteMBA and The Note Closers Show. And then look at The note camp at http://www.notecamp.live/?lipi=urn%3Ali%3Apage%3Ad_flagship3_messaging%3BbkK300rPRcqJcE%2B3xF%2FkUw%3D%3D hope this helps.
4 Reply
Joe Tomko
Specialist · Easton, PA · Member since 2018 · 137 posts · 48 votes
8y
Nice contribution, Dan. I hear Linda.com has excel training as well.
I am creating my calculator and, being new, my challenge is figuring out what the expenses (or potential expenses) are as well as how much each will be for a given state, county, property. I want to calculate for reinstatement (and modification) and for foreclosure (and deed in lieu). Those are my primary and secondary exit strategies.
1 Reply
Gary A.
OP
Investor · SF Bay Area · Member since 2016 · 78 posts · 16 votes
8y
@Brian Bradley Spot on, Brian. I've figured out the answer to my questions through other routes. I find it's always good to ask questions on BP because you might get a relevant answer. Because this is a free forum, a lot of people don't give relevant responses, feel like adding their 2 cents, or just want to comment. BP can be frustrating.
But if you keep searching for your answers, you'll find them. Just as you mentioned, Brian. Best of luck on getting started in the note space. It's a great business!
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Brandon Z.
Coral Springs, FL · Member since 2017 · 23 posts · 7 votes
8y
@Brian Bradley I wholeheartedly agree with you. I find myself working hard on breaking into the note investing space. I have found some benefit from reading posts and listening to podcasts from various sources. However, in order to really start to put all of the pieces together, there is simply no substitute for hands on experience be it picking someone’s brain on the phone, over lunch or ideally shadowing someone while they perform common everyday tasks of note investors. So far, I have been very fortunate to be able to connect with some well respected and extremely knowledgeable note investors. I attended my first major industry conference this past Feb at Distressed Mortgage Expo in Newark, NJ. I am looking to learn from note investors in order to expand my working knowledge of this niche. I am looking Ron volunteer/intern/apprentice with someone(s). I am very organized, have excellent oral and written communication skills and am pretty familiar with Excel and Word. Please feel free to reach out to me offline if you’d like to discuss the possibilities further with me.
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Brandon Z.
Coral Springs, FL · Member since 2017 · 23 posts · 7 votes
8y
@Joe
@Joe Tomko Thanks for sharing that tip about Linda.com. I actually had access to it through my last job but I’m sure that it will be severed at some point. But I use Excel at my present job to help track my weekly job productivity. You can really use Excel for anything that you’d like once you learn your way around it. I have seen some investors sync’ certain parts of their Excel spreadsheets to their bookkeepers in order to facilitate easier relay of essential information. The possibilities are truly endless !!!
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Kimberly Banks Fawcett
Investor · Orange County, CA · Member since 2014 · 19 posts · 44 votes
8y
@Brian Bradley Actually, Gary did expressly ask for an ROI calculator. "Does anyone have any recommendations for, or can send over, an ROI calculator I can use to evaluate tapes effectively?" That's where our responses came from. I do understand your point that it's hard to know where to start but I stand by my assertion that starting with someone else's is a very bad idea.
As @Nathan Turner mentioned, he and I compared our calculators. That is the very best way to get input into how yours is working and what you might be overlooking. Even after you've been doing this a while, you can learn a new twist that might make your process easier.
New investors need to build relationships in this space. Go to events and talk to other note investors. If you find a like-minded one, sit down and compare calculators. You'll both grow and learn. Bigger Pockets could be a great way to start that kind of relationship but it's probably not the best place to do the hands-on work.
Personally, I won't give my students a calculator but if they take a stab at it first, I'm happy to go over it with them and see what they've left out. They need to think the entire process through first, on their own, to understand how a deal really works and it is not helpful if I let them skip that part. It has nothing to do with not wanting to help others succeed.
Also, I wholeheartedly disagree that note investors are not open, helpful people. I've been in real estate forever and I continue to be shocked at how open note investors are to sharing ideas and resources. It does get exhausting to be peppered with the same new investor questions over and over though. Maybe you are speaking to the wrong people or somehow approaching them at the wrong time.
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
8y
I agree with @Kimberly Banks Fawcett Note investors are very open and share ideas and resources. There are some things people do not share, like their calculator - its like asking Popeye's for KFC's secret ingredients. Also note investing is a business, you cannot expect to take a weekend class and have everyone provide you with free information and have it handed to you to start a business. The reality is the note part of the business is easy, the marketing, managing your business, expenses, cash flow is the difficulty and that is where most fail. There is not a one-all book you can read to be a note investor, I do not know ANY business where that exists. If there was one in notes I would not expect it to sell for less than $10,000 because the reality is between sweat equity and monetary contributions that is atleast what most successful note investors put in for time and effort before they start making $.
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Jason Dellaposta
Specialist · Montreal, Quebec · Member since 2017 · 19 posts · 6 votes
8y
@Gary A. I’m developing one as we speak it calculates different outcomes and the ROI for each
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David Putz
Investor · Jackson, NJ · Member since 2010 · 167 posts · 55 votes
5y
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David Putz
Investor · Jackson, NJ · Member since 2010 · 167 posts · 55 votes
5y
@Jason Dellaposta I apologize for not seeing this post earlier. I was part of that call with Kimberly and Nathan a few years back and it was great to share information. Being in the note space for over 10 years, putting a bid calculator together has been the number one item that most people ask for. However each method of calculation is unique to how the look at deals, which makes "sharing" difficult. On the flip side it is also that secret sauce that gives you the leg up. Feel free to reach out with any questions. JKP Holdings
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