C class NPNs in a cheap market, how much to budget?
Hi all,
Working backwards from an initial goal of $300 per month, $3,600 per year, I would need $18,000 in starting capital if my average return is 20% per year from NPNs.
Sounds doable in terms of saving, but my concern is that if I buy 2 or 3 notes, probably NPN junion liens, each one will still be too small (really bad quality or bad collateral in a dangerous area).
I would like to ask you guys what a realistic floor amount would be to budget per note in a cheap, midwestern C class area where homeowner quality is still acceptable for note investment.
I am thinking it would be around $10,000 and I would want another $5,000 in reserve, these are just guesses though. If this is in the ballpark I'll change my thinking on starting with multiple notes even if the starting risk is higher that way.
PS: I'm willing to put in the time on junior liens. My main concern is covering my downside especially on the initial batch, so that I can get rolling.