how do you calculate the rate of return on a NOTE
There is a performing note that i came across and wanted to find out what parameters that other investors look for before purchasing.
Property is in Kellyville, OK.
BPO: $65,000
UPB: $18,560
Payment: $400/month
Number of months remaining: 45
Purchase price: $17,083.
Im using a financial calculator to calculate my return. N=45, PV: 17083, PMT=-400, My return (I/YR) is 2.75% ?. Not sure if it is worth buying. Can someone shed some light on this?
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Pari, another factor I consider is the size of the community the property is in. With fewer than 1200 inhabitants, if you get the property back that's a pretty small pool to draw a new buyer from. I target notes in towns with a population of at least 10,000. That's just me, but you should probably have some number below which you will pass. I'd pass.