All Forum Posts by: Derek Kirkwood

@Daniel Scott You might still be ok depending on the timing. If you lived in it for 2 out of the last 5 years then you still get the exemption. That assumes you have not got the exemption on another property in the last 2 years. Obviously, check with a CPA.

Forgot to mention previously, depreciation recapture will be a factor too. That would reduce your cost basis and increase the tax. Thats assuming you don't qualify for the exemption. 

The capital gains exemption mentioned by @Jen Nelson is only for your primary residence. You didn't say exactly, but I get the impression you don't live in this town house. If its not your primary residence there is no capital gains exemption. You can defer the tax by doing a 1031 exchange but that only defers, there is no way to avoid it completely.

You can add any costs of improvements you did to the basis, but ultimately you're going to pay tax on the difference between the sale price and your cost basis. As others have pointed out, the IRS doesn't care how you have it financed.

Good question, I would bet its marketable. It sounds like a similar concept to a zero-coupon bond, which people buy all the time but at steeper discounts. As far as calculating the discount I agree with Mike and Chris to just do an NPV calculation with the actual cash flows and dates. Specifically in excel use =XNPV

I wonder about doing a split partial in this case, selling a portion of all 250 payments rather than all of the next 120?

Last thought is why not just sell the entire note as a performer? But you are probably wondering for the partials you have already sold more so than this particular one.

Credit report or phone automated system. Ask the seller for a recent credit report. If you don't have access to either of those see if the county has records online. Look up the original mortgage or deed of trust. That will have the original balance, start date, and maturity date. They usually don't have interest rate but you can make an educated guess. Use that information to reconstruct the amortization table. Assuming this is a current senior mortgage then assume they have made all of the payments on time and look up what the balance would be at this point. It won't be a perfect answer but will be close enough for your purpose. 

Michael, 

Be careful in these discussions to draw the distinction between Yield and ROI. Everything that was said above about using a financial calculator such as 10bii to calculate yield is true, but this yield is not the same thing as ROI as most people think of it.

When people talk ROI they are often thinking of compound annual growth rate (CAGR), such as the stock market, or a bank savings account. The big difference here is that interest on an amortizing loan such as a mortgage is charged on a smaller and smaller amount as the principle balance is paid down. Whereas in your bank savings account you are paid interest and the balance stays the same and actually goes up as you earn interest on your interest, hence the word "compound".

The problem with confusing these is if you promise an investor an 8-12% return, they are going to assume you mean compound annual growth rate of their money (wouldn't you think that?).  But if you buy a discounted note where your yield is 15% and you promise the investor 8%, you will actually be losing money.  Unless you are very clear in that you are offering them 8% yield, which is not the same as their original investment growing at 8% per year.

Honest question here that I don't mean to sound negative or rhetorical, I'm genuinely curious.

When posting details about pending litigation on a public website is the assumption that the borrowers and their counsel are not going to find this?  Or its so unlikely that you are good with the odds?  Theres enough details here they would know you're talking about them. 

Just curious.  Thanks for the updates.

I find the stock market to be extremely boring.  I'll die of boredom long before I ever get to retirement.  It goes up, it goes down.  Usually more up than down.  Is there more to talk about?

I like real estate.  I love that note investing is knowledge based.  Knowledge is power, you earn because you learn.  Its also reasonably portable which is great for my lifestyle.

 Could you elaborate?

You should talk to @Eran Linker if you haven't already

The new site is https://exchangeloans.com/ for the trade platform side of their business.  Its my understanding that the servicing part of their business, FCI Lender Services, will continue as is.