Tax Liens & Mortgage Notes
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated over 8 years ago,
Buying my first note
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...