All Forum Posts by: Joseph King

No, just MS ,OK ,AL ,MI

We are excited to present you with a unique investment opportunity that might align with your strategic or diversified portfolio goals. Our latest selection of assets offers the potential for significant returns, with a streamlined process for competitive bidding, swift diligence, and closing timelines. Each asset comes with a Clear Title, ensuring peace of mind however, we always recommend conducting thorough due diligence for any purchase.

Special Notice from the Seller:

We are seeking serious investors ready to engage in competitive bidding. Cherry Picking is Okay and there is a due diligence period of 7 days following your initial bid. The closing timeline is 14 days ensuring a quick turnaround.

Looking forward to your insights and potential participation.

We are thrilled to announce our latest collaboration with a distinguished private seller, bringing you an exclusive selection of 9 Lease Options. This unique investment opportunity boasts attractive interest rates in the 12% range, with monthly payments positioned comfortably between $600-$900. These meticulously curated options are projected to generate an impressive income stream in the range of $5,000 - $6,000 monthly.

Special Notice from the Seller:

We are seeking serious investors ready to engage in competitive bidding. Cherry Picking is Okay and key terms include a swift diligence period of only 7 days following your initial bid, with a closing timeline of 14 days ensuring a quick turnaround. All assets come with a Clear Title for your peace of mind; however, we strongly advise conducting thorough due diligence to ensure this opportunity aligns with your investment strategy.

Don't miss out on this chance to expand your portfolio with these compelling lease options.

Kate, Since your property is not designated as a duplex, our experience is its not a duplex but probably a SFR due to non conforming with the city. We purchased a similar property in Florida that was vacant over 90 days, made it Non conforming, this may be an issue with the appraiser. be careful of selling as duplex if not city approved zoning. Based on selling for higher roi, your idea to jump into higher assert class maybe a good idea but has to pencil out. As to Notes, you dont own the property that comes with maintenance expenses but you own/control the paper-Note. If you like more info you can find on BP or free training monthly, go to Revivalbothers.com or have any questions.

That's a good question, As I started looking into note investing it was a challenge to analyze notes against multiple exit strategies. We don't use anything other than the IPA note analyzer! 

Darrin, Have you heard of he Tidbits for Note Investors? This is a free weekly zoom meeting every Thursday at noon PST, this is one of the better education platforms. The topics cover the Good and Challenges in the note industry including Q&A!!

One other thing I would like to mention is when comparing mutual funds and notes, there is a risk component to consider. When the mutual fund loses value, you will take a loss with no way to recover outside of a market rebound which can take many years to recoup.  When a note goes into default, your investment is secured by the real estate the note is tied to, meaning you have the ability to recover your losses through foreclosure in a relatively short time frame comparatively.  In my opinion, you can mitigate risk through note investing. A well-managed fund or joint venture can give you higher yields, lower risk, and peace of mind.  Of course, there are exceptions to the rules with the type of notes your invest in and how current Interest rates affect inventory and yields. That said,  well-diversified portfolios will have a mix of non-performing, performing, 1sts and 2nd position loans with many exit strategies designed to maximize profitability.

Sound like you are looking at bonds or note funds, not necessarily individual notes. In my experience, larger portfolios, funds, and even bonds will be calculated differently, with the main difference coming down to expenses and the discount you get from par when acquiring. To answer your question, variable Yields as your title indicates, could be the result of a waterfall distribution which can only be calculated with an understanding of how it was originated from the Sponsor.

For individual notes, the calculation is simple, but it is essential to understand the difference between the Rate of Return and Yield. They are not always the same.

With a performing note, the Yield is the same as the internal rate of return (IRR) if the rate never adjusts and the payments remain the same over the term. For example, if the loan has an adjustable-rate mortgage (ARM), your monthly payment will change over time. In this case, the internal rate of return becomes a more valuable measurement than a rate calculated from a single payment for the Yield. This is because the IRR considers all monthly payments in the amortization schedule even if they are different by taking weighted averages over time.

The proper way to calculate the net yield of a “fixed-rate” performing note is to consider net income over time against your investment. I agree there are many ways companies are evaluating their Yields. They can be calculated on an individual note level, through a fund, a bond, or even through privately held portfolios. The main difference in the yields should come down to your discount at purchase and expenses like servicing, management, equity sharing, etc.

The most common way I have seen the Yield calculated is by solving for the RATE and assuming there are no adjustable rates. The fixed-rate Yield can be easily calculated in Excel using the “Rate” function.

RATE (nper, pmt, -pv, [fv])*12

• “nper” is the number of periods remaining on the loan.
• “pmt” is your net monthly income
• “pv” is the present value - your purchase price plus direct expenses
• “fv” is the future value of the loan which is set to 0 because this is the value when the loan will be paid off.

Here is an example of the calculator we use for dissecting notes.

@TJ Addison, there are many real estate investment strategies out there, and each one has a concept and process associated with it. Nothing is different when it comes to note investing. Also, comparatively, there are many more exit strategies that can come out of a note than any other real estate investment strategy. For that reason, I prefer Notes over any other type of investment. I believe most investors lack confidence because of the five areas I have outlined below.

1. 1. Understanding the process from acquisition to disposition
2. 2. Understanding the Paper
3. 3. Analyzing the numbers: It starts with your offer. 
4. 4. Your due diligence will likely be two-fold, pre-acquisition, and post-acquisition
5. 5. Placing a Bid and Funding a Note

@Hayden Smith, Have you considered carrying paper on the rentals?  This would allow you to capture a down payment on the loan, create cash flow, get rid of property maintenance, tenants, and management, and maybe even slip into a better tax situation. Also, once you have seasoned your loan (at least one year), you could sell a partial (like 180 payments) where you again receive a lump sum of cash and keep the back-end of the loan for a future payout. The net outcome is, you can cash out sooner(which increases your net yield), recapitalize, and repeat on the same dollar.