PN investments: What is a good NPN projection to use?

[Gary Dezoysa]

Hi,

For a passive performing note investor buying from a professional note broker (found here or elsewhere), what is a reasonable projection to use for notes that turn into nonperformers? I am thinking of projecting a 20% nonperformance ratio, I'm not sure if that is wildly high or low for this industry.

Thanks

[Dion DePaoli]

Gary, chances are you don't have enough capital for this to be a meaningful statistic.  Approach your needs as a function of yield and total return.