With such high interest associated with a longer loan, Bloomberg Intelligence forecasts that by year 10 out of 50, borrowers will have only paid about 4% of their principal balance.

.• Make sure you’re including full PITI + mortgage insurance.Your net cash flow should factor in principal, interest, taxes, insurance, and FHA mortgage insurance.

Goal would be to recycle the invested principal twice per year.Or- Invest into a development project and be in 2nd position behind construction financier? 

That means you would owe taxes on every dollar you netted after selling costs above $0.

For loans we purchase this is more problematic as value of property in defaulted loans has already dropped significantly by the time we enter the picture and the seller is already taking a big “hit” to principal.  

Quote from @Logan Walkup: What collection agency is best for prior tenant that owes money?  

I have a tenant from a Texas investment property who owes back rent, fees, and damages of $3600.

I miss the potential “home run” when buying at a large discount to principal balance.   

Refinancing / Cash-Out OptionsPrimary Rental (SFH, $3.5M value, $300k owed):Current LTV ≈ 8.5% — huge equity.A conventional cash-out refi could let you pull up to 70–75% LTV.

The seller still owed around $350,000 but had a lot of equity and wasn’t in a rush.