Notes, Cashflow, Interest & Principal

[Kelly Foydl]

I've been reading for a few days about Notes and they are pretty awesome. I've been searching for some ideas on the area of reinvesting, cashflow and principal. Can someone please post the link to the right threads to go cover the below concepts, I am not quite finding the details I am interested in hearing more about.

So you buy a Note for cashflow (for the exercise, it's a new PN). Part of the payment you receive is principal some interest. So if you buy $120k note for say $100k with 340 payments left (no I did not test the math cause that isn't as important)...if you are after cash flow, do people only count the interest portion for cashflow? Do they keep the principal separate ready to reinvest?

I completely understand NPN (especially in junior position) where you buy at a deeper discount and lower price point...get it back to Performing, hopefully getting a good down payment from the homeowner, a few payments and resale to get your principal and profit back in a shorter time frame. Profit and few payments easy to see.

So the question/thread I'm trying to find is...if you are building for cash flow, want to keep reinvesting...what portion of funds are generally used to cashflow, which for principal reinvestment.

Hopefully this makes enough sense. I'm trying to envision this investment long term and growing, yet still creating cashflow. I know it must happen and it's probably fairly simple.

[Mike Hartzog]

The question makes sense.  The interest returned to you is your profit, while the principal portion is a return of your working capital.  If you want to maintain your working capital at it's current level, you preserve the principal portion of the payments you receive for reinvestment.  Ideally, you would be able to reinvest both principal and interest for a time to grow your working capital before to begin taking interest distributions.