Bidding on Non-Performing Notes

[Wesley Wells]

I was just wondering what factors do my fellow investors use when evaluating a non-performing note to determine the offer for an asset on a tape? Also what price point should I typically expect for a note (i.e. Bidding 30% -40% of UPB) or is it merely negotiating the purchase price? There is a good chance my first offer will be rejected but I do not want to submit a offer that will not be taken seriously and prevent future business. Thanks for the help.

[Varinder Kumar]

Depends on the exit strategy. Once you figure out your goal with notes then the criteria of evaluating notes on a tape will be based on your goal. For example, I want to build capitol so I'm not interested in performing notes or getting them performing, doing a work out etc. Atleast not yet. So i only look for non performing notes which the home is vacant, hopefully already foreclosed on and has a good spread on value (considering all fees and liens and taxes etc), so that I can sell the property for cash in its as is condition without doing any rehab. By looking for properties like this I will be able to achieve my goal of building capitol fast though the proceeds of the sale of these homes. But if you want to have cash flow then yes you would do something different, it wouldn't matter to you if the home is vacant etc because your going to want to put someone in there anyway so you can start collecting payments. Alot of other factors involved like days on market in that area etc. but know your exit strategy and then execute accordingly to satisfy your strategy. Hope this helps.

- varinder