What’s the lowest interest rate you’d accept for a note?

[Connie Chan]

I know the interest rate is directly tied to risk and neighborhood, first lien, performing etc. Is there a floor for what interest rate you’d accept— for example a house in a great neighborhood with a low debt to equity ratio?

[Bob Malecki]

When purchasing distressed-debt that has potential  loan modification future we typically set the floor at 12% annualized cash on cash return. When making a loan modification I will typically set the coupon rate for the loan no less than 7%. If originating a new loan our floor is 8% although much of this in any scenario will depend on the affordability for the borrower. 

Although in many cases it's "what the market will bear" setting the loan rate and term so that it's affordable to your ba roller will help ensure long-term performance.