10-year note, 50% LTV, 10% Interest

[Derek Petersen]

Would you buy this note on several residential homes in the Atlanta market? I haven't done any long term lending in the past, only 1 yr balloons. I guess I'm at risk during a high interest rate environment if one should develop? Upside on long term note is a better yield. 

Any other considerations?

[Steve Vaughan]

Personally, no.  Interest income is for the rich and (according to the IRS) must be punished! Once I exceed $600 in interest income, I no longer receive child tax credits of $1k each.  I also pay taxes at my highest rate.  That reduces my 'interest rate' to about 6% tops.   

I usually earn 20% COC on my buy and holds. Like I said, personally, the return isn't there and I don't like venturing into the punished zone tax-wise. If you have a bunch of interest income you are reporting anyway, a 10% return secured by a 50% LTV on property not in a war zone may sound pretty good. Better than bank deposit rates or a sharp stick in the eye! Thanks for listening @Derek Petersen !