All Forum Posts by: Edward B.

@Ricky Ozbirn, are you saying that he could walk from college with only $20k in student loan debt? I'm pretty sure that puts him ahead of like 90% of the kids in college right now. I'd have him get the loans and decide if I wanted to help him pay for that.

@Aubrey Martin, NPNs are "sexy" like flipping properties is "sexy". e.g. there are not a lot of HGTV shows on buy and hold investors. My experience in the 1-2 years that I have been int he note game is that performing notes are not a bad route to go. Ten percent returns are very realistic and you can get a good boost when they pay off a note that you purchased at a discount. I have JV'd on a couple of NPNs and the returns honestly are not that much better since they are trying to get 20%-30% returns and the margins are getting squeezed with all of the new players trying to get in the market...just like flipping.

I think a good strategy is to start with some performing notes to get your feet wet and your accounts set up (servicing, collateral holders, BPOs, Title, door knockers, etc). It may put you in a good position to pick up an NPN when it comes along to shoot for that big return. Being able to say that you have even a small portfolio of notes will give you some cred. You may also be able to find some people looking to just get 6%-8% return on their money and you can make the spread to build your portfolio.

I too have a finance background which is why notes appeal to me as well. Lots of opportunity here if you are smart and patient.

@Jacob Carter , sounds to me like you are talking about DSCR. Like any measure of risk, that is highly dependent upon your risk tolerance. Banks like to see 1.25 or higher if they are going to lend on a project so that is not a bad place to start.

@Jacob Carter , they are mutually exclusive in my opinion. You have measurements of performance to determine if it's a good investment and then measurements of liquidity to determine if it is a safe investment. If you try to combine the two then you may skew the results and get into something that is either not good, or not safe, or both.

@Jacob Carter , I don't understand your metric? Debt can magnify your return, but there is no return on debt unless you are the lender. Cash on cash, ROI, IRR, those are what you should be looking at and if this deal is better than you can get anywhere else then it should get closer scrutiny.

Buy and hold guys have property managers, flippers have contractors, and note investors have servicers. We all have our cross to bear.

@Ricardo Fainsilber , the return they offer is your return. It was 12% when I got in and that is what they pay. Kind of hard to buy a reperforming 2nd with little equity for a realistic return if less than 12% when you can get 12% investing in a portfolio of such loans or better run by a company with a solid track record. You never get the pay off kicker, but so far you have been able to reliably bank that return. They got me into note investing and may have spoiled me to it as well.

PPR is an industry leader and them and Dave Van Horn are the reason I invest in notes. I am invested in their fund and they pay their solid return religiously. I find their note offerings to be on the expensive side, so have not bought anything from them. Of course, they also offer an unparalleled warranty on the notes they sell, so that is probably worth a premium.

@Julian Joseph, what interest rate are you paying? 5%-7%? and that is tax deductible as well so less really. If you can get into an investment returning 8%-XX% you can use that to make the payment on the loan and pocket the difference. It is more complicated than that, but you get the idea. 

How you handle your debt is really a matter of personal preference. I try to ensure that I am not overextended, but can be fairly aggressive at the same time. You need to have a good understanding of how it all works and the risks involved in the different types of lending, borrowing, and investing.

The student loan debt is actually my wife's. We paid off about half of it very quickly because it was at a higher interest rate and I wanted to get our DTI down to purchase a primary residence, but I am making the minimum payments on the rest of it for the reasons I stated above. Our financial situation is significantly different than yours, though, and you need to do what is right for you.

@Andrea Barbee, notes on MHs w/o land (a depreciating asset) for such a long period is not particularly appealing. You can get a much better yield secured by an appreciating asset and that's what most experienced note investors are looking for. So I believe you will have a hard time unloading them in traditional note investing circles.

Maybe market to people with SDIRAs. A LOT of people set them up and put money into them and then never do anything with them except pay the fees. If you have a fairly secure investment earning a steady 9% it would be better for them than sitting on cash. Just a thought.