What is it with note seller demanding PAR for a performing note?

[Sean Mcintire]

Help me to understand please.

I equate all REI including notes to dating. THis kind of mentality ends up leaving a person 50 years old and single and alone. -Sean

[Don Konipol]

@Chris Seveney

I find the same thing. People get hooked on the yield they were able to get in the past, and it takes some time for them to psychologically adjust. One of our investors didn’t want to accept a yield net to him of 11% vs the 12% he has been getting. So he ends up investing in business receivables instead of real property, and doesn’t regard the difference in risk. After that doesn’t work out he does a second lien on a condo with little equity as he continues to chase yield regardless of risk. More sophisticated investors understand its the risk adjusted yield that’s important, not the absolute yield regardless of risk. While higher risk investments may have a place in an investor’s portfolio, the investor needs to analyze the increased risk in relation to the yield, expected default rate, and his ability to suffer loss to the principal value of his investment portfolio.