Note Investing Advise

[Duriel Taylor]

Good evening all, I hope all is well. I wanted to reach out to the note investors out there. I am not interested in buying this note right now, but I am trying to understand how to underwrite notes in a whole. I want to know what experience investors look for. As a experience flipper and buy n hold investor, even if the numbers do not make sense, I can underwrite to the numbers I want to offer and my max offer, thus I want to understand how to look at these assets the same. Please see attachments. I will give you an overview of the offer.

My note investing goals; Buy low Non-performing Hold and collect mortgage payments
Resale to an investor looking for performing note
Address: 2124 Tullis Dr Montgomery, AL 36111

Asking: $42k

Layout: 3/1, single family home

Area: C

Lien position: 1st

UPB: $80,968.80

Monthly mortgage payments: $719.78

Sale comps: $62k

Rental comps: $600 per month

4 months behind on mortgage payments

Taxes: $218/year (actual, from county website)

Insurance: $217/yr (based on a formula for a home in the 50k-60k range)

Here are my thoughts on how to underwrite it:

Offer: $28k

Fair Market Value: $62k

Modified mortgage payments: $650 monthly

Payment upfront: $5k

I came up with the 5k based on lawyer fees, BPO, tax for the yr, insurance for the year and servicer fees.

-My exit strategy is to make this perform again for 6 months and resale to an investor whom preferences are performing notes.

-I would sale the note as performing, for 50k.

-I will gain $3900 for the 6 months as the note is now performing.

Questions:

1. Am I taking the right approach by collecting the 5k upfront from the borrower? (the fees to complete the transition)

2. If I am collecting those fees upfront, how do this benefit the end investor and or what disadvantages does the end buyer (note investing wanting a performing note)? Since, I am paying the taxes and insurance upfront for year 1, which is collected from the borrower, when will the end investor have to collect to ensure these expenses are paid in year 2 and beyond?

3. Is there a percentage in which I should underwrite notes? For example, when you flip a home, you should buy it at 70% off the after repair value, this will ensure a 25%-30% profit margin once you sale. I also ask this based on the end investor, how much meat do you leave on the bone for them, as far as the equity between fair market value and agreed purchase of the note?

4. Are there any critical points in which I missed when underwriting this note?

Please reply with as much information as you want. I do and will greatly appreciate your time and replies. I look forward to hearing from you soon.

Regards,