Re-performing CFD in Indiana 76% ROI!!

[Natasha Hunter]

Investment Info:

Single-family residence note investment investment in Kendallville.

Purchase price: $18,500
Cash invested: $23,000
Sale price: $35,500

Case Study of our Kendallville, IN CFD

Ironside Investments purchased this note in October 2017. This is a 4 bedroom 1 bathroom home boasting 1876 sq feet near the fairgrounds in Kendallville, IN. We had some trouble reaching the borrower at first. After about a month our servicer made contact and found out the borrower wanted to stay in their home. We came to an agreement in December for the borrower to make all the back payments in January which they promptly did. This borrower has steadily been making payments since January. The servicer handled all of the paperwork, borrower outreach and we collected the monthly payment. We recently sold our CFD after only a week of being on the market. Here are the numbers:

Original Loan Amount: $ 42,700.00
Loan Origination Date: 12/09/2013
First Payment Due Date: 01/01/2014
Last Payment Date: 9/27/2018
Current Loan Balance: $ 41,802.77
Current Interest Rate: 9.900%
Current P&I Payment:$ 371.57
Current Escrow Payment:$ 30.43
Maturity Date:12/01/2043
Term Remaining: 302
Loan Type :CFD
FMV: $87,500

The Workout

We picked up this asset for $18,500 ( 44% of UPB)

Expense Cost: $2000 (Includes, servicing, initial due diligence, forced place insurance, back taxes and misc)
Contingency Fund $2,500
All in Cost= $23,000

8 Months of Payments = $2968
Reinstatemet fee from borrower = $2000
Total Income received $4968

We sold this property after 1 year as a re-performer for $35,500 (Approximately 85% of UPB)

$35,500 + $4968 = $40,468

Total ROI = 76%

We're excited with how this one turned out and can't wait to see what we will do with our next one!

What made you interested in investing in this type of deal?

I love note investing as you don't have any of the responsibilities of a landlord but you have the security of the asset

How did you find this deal and how did you negotiate it?

I found this deal through a hedge fund. I initially offered $15,500 with my max offer being $19,000 but we negotiated to $18500

How did you finance this deal?

Through a Joint Venture agreement utilizing SDIRA funds

How did you add value to the deal?

I found the deal, conducted the initial and final due diligence and worked with servicers to come to an agreement with the borrower.

What was the outcome?

We got the buyer reperforming and collected 8 months of payments plus a reinstatement fee of $2000. After 8 months of seasoning, we sold it to an investor as a performing note.

Lessons learned? Challenges?

It may take a few months to get buyers to speak with you. Start sending out the foreclosure proceedings immediately as to not cause delay

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Madison Management Servicing Company.