The other thing to note is most times Pref equity is pretty save assuming a 10-20% market correction but in 2021-2023 we saw a 30% correction meaning pref equity in deal specific deals were underwater without any options.

Forced appreciation allows me to build equity from the beginning of the investment, so if I need to firesale for an unforeseeable reason, I will not be underwater.- Debt-Paydown is a result of time.

@Bijan SabbaghiYou don’t that’s the challenge - we pull data from several places as a note holder and for example and currently we see less than 20% actually going to foreclosure as most are ending in bankruptcy right now due to borrowers equityThe ones that are under water are typically going back to the bank.Best bet is to find properties where deceased or maybe divorced to get higher chance of actually going to foreclosure

I'm underwater with my mortgages and credit cards and bills.

Originally posted by @Scott Carson:  95% of the NPN paper falls under the $125K FMV with over 7 million homes still underwater.  

May as well draw the parallel that nobody should invest in real estate because SWIM bought a house in 07 and was underwater shortly thereafter

This book will help you learn how to underwrite.With the little information you have given, this purchase will be underwater.

So, just speculating here, if they bought a slew of notes with the expectation of flipping them within a few months for say a 10% profit, but they have a hypothecated loan against these for say 12%+, and are still holding them 12 months later are quickly underwater. 

Hey what are you going to do with that lot, or you know it is landlocked, or you know it is unbuildable, or you know that is under water, or whatever? 

They had given a loan for 50% of the value and now they are close to underwater.