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Updated over 8 years ago,

User Stats

289
Posts
253
Votes
David Fernandez
  • Real Estate Agent
  • Vienna, VA
253
Votes |
289
Posts

Buying my first note

David Fernandez
  • Real Estate Agent
  • Vienna, VA
Posted

Hi!

I invested in RE for a few years now. Usually, most of my investments are buy property and rent it out for positive cash flow or sell them for profit. I am more used to analyzing short term investments rather than long term.

I got offered some notes to purchase and I started doing some research about investing in notes. I read lots of posts here at BP and I am incredibly thankful for all the advice you all share. Without your inspiration, I would not be considering this new investment route.

However, although I can analyze an "standard" real estate investment (what I've been doing until now) easily, I am having some issues analyzing a note investment. For example:

    - Property Value: $60,000

    - Original Balance: $42,000

    - Unpaid Principal Balance: $31,000

    - Remaining Term: 18 years

    - Rate: 5%

    - Monthly Payment: $227

    - Note Purchase Price: $25,000

I get an XIRR = 8.45%. However, I am not sure how to go from here.. How do I calculate ROI? I am also interested in knowing the NPV of the total amount I will be paid through all 18 years and subtract the purchase price to know what are my earnings; what interest rate do you use: current loan rate / gross yield / finance rates , etc.? Annualized of monthly?

Any other values and/or indexes that you look at?

Thanks a lot and I apologize for such rookie question...

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