Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Tax Liens & Mortgage Notes
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 7 years ago on . Most recent reply

User Stats

32
Posts
9
Votes
Michael Rosenson
  • Chicago, IL
9
Votes |
32
Posts

Note Investing Rules of Thumb

Michael Rosenson
  • Chicago, IL
Posted

I was wondering what some rules of thumb are that people use when evaluating note investing opportunities to narrow the focus. Obviously these would only be guidelines but I'm curious what others use to limit the scope of their search. Some ideas that came to my mind were things like:

1) Borrower's credit score over XX

2) Borrower's equity in the property (something like XX% of principal having been paid off)--this would support the "emotional equity" argument that I've seen around

3) Interest rate over XX (gives wiggle room for a lower rate for a loan mod)

4) Senior status needing to be current (if 2nd lien)

5) Needs to earn over XX% of a returns (IRR, ROI, etc)

Do people use any of these?  If so, what is the rule and how did you come up with it?

What other rules of thumb do people consider?

Most Popular Reply

User Stats

174
Posts
238
Votes
Wayne Snell
  • Londonderry NH & Miami, FL
238
Votes |
174
Posts
Wayne Snell
  • Londonderry NH & Miami, FL
Replied

I will second Gail's comment. I keep hearing about how hard NPNs are and yet I was able to quit my full-time VP of Global Software Marketing job over a year ago, and somehow I am still eating. We have 300 notes. Are they work? Yes. Can you get burned? Yes if you don't know what you are doing. Should you avoid them? Yes - so I can buy more.... 

  • Wayne Snell
  • Loading replies...