All Forum Posts by: Scott Matthew C.

@Ryan Visser I have a few projects that I would consider doing seller financing. DM me and let’s setup a time to conference call.

@Scott Matthew C.

I apologize the for the error but someone pointed out “country” and it should be “county” in my initial reply above.

 @Chris Seveney Thanks for your perspective. I would make my bid on half of 80K and work my way up to what is comfortable for me. However, I agree with your approach and would bid at 55K and if I find anything during my due diligence that would suggest lowering my bid I would. 

@Oriah B. Does this help answer your question(s)? 

For those who are reading this thread. IRR stands for Internal Rate of Return, which is a financial metric used to calculate the potential profitability of an investment. It takes into account the time value of money and calculates the rate of return that makes the present value of the investment's cash inflows equal to the present value of its cash outflows. It is commonly used in real estate and other investment analysis to compare the potential profitability of different investments.

 Thanks for bringing my error to my attention. I wanted to add some value to @Oriah B thread for those who may not fully understand it. In my opinion, asking for 80K is too much, but it's important to also consider the market value of the property.

@Chris Seveney met @Oriah B.

Oriah, Chris Seveney has far more years of experience. I know enough to know enough but I still lean on others who have been before me. Chris's wisdom is a deep well!

Oriah, I would like to hear what Chris thinks of your opportunity. I'm sure he has other thoughts and suggestions. Obviously, due diligence still needs to be done, but from a bird's eye view, Chris, what are your initial thoughts?

 Hi @Don Konipol. Thanks for your post and providing general information about your opportunity. 

I am not providing financial or investment advice below, just an assessment and opinion. However, based on the information provided, there are several factors to consider in determining whether this NPN is a good deal.

For those who are new to real estate investing, the term NPN stands for non-performing note.

In real estate, a non-performing note is a loan that is in default because the borrower has stopped making payments on the loan. This means that the borrower is behind on their payments, and the loan is delinquent. As a result, the note is considered non-performing.

On the other hand, a performing note is a loan where the borrower is making their payments on time and according to the terms of the loan. The loan is current, and the borrower is not in default.

Investors often purchase non-performing notes at a discount, hoping to either work out a new payment plan with the borrower to get them to start making payments again or foreclose on the property to recover their investment. Conversely, performing notes are generally considered less risky, but also offer lower potential returns.

@Don Konipol now that my explanation is out of the way, I can provide my opinion regarding your opportunity.

Firstly, the property has an estimated value of $140,000, and the unpaid principal balance of the note is $85,408, which puts the loan-to-value ratio at 54%. This seems like a reasonable ratio, although you would want to verify the property's value to ensure that it is accurate. 

The formula for the 54% LTV: 

So, LTV = (UPB / Estimated Value) x 100%

LTV = ($85,408 / $140,000) x 100% = 0.6108 x 100% = 61.08%

**WARNING*** The original post stated that the LTV ratio is 54%, so it's possible that the author made a mistake or used a different formula to calculate the ratio.

Nevertheless, the interest rate of the loan is 9%, which is a decent return, and the loan is not an interest-only loan. The borrower has also made a payment as recently as September 7, 2022, and there are still over 200 payments remaining. This indicates that the borrower may have some intention of repaying the loan.

However, it's non-performing and in foreclosure, and there is an accrued late charge of $694.38. This suggests that there may be some risk involved in this investment.

Ultimately, it's up to you to assess the risk and reward of this investment and determine whether the potential returns outweigh the potential risks. 

In summary, I recommend submitting a low enough bid that isn't too discouraging to receive a response. But, it's important not to exceed what you're willing to pay, especially if it doesn't align with your desired return on investment and could result in a loss that is beyond your comfort level.

@Don Konipol Nice to meet you. I hope my perspective has helped.

**What factors do you typically consider when making a bid, such as unpaid principal balance (UPB), total legal payoff, broker price opinion (BPO), or others? I would greatly appreciate hearing your thoughts and learning from those who are more experienced than I am.

Hi @Eliott Elias. Nice to meet you. 

@Kinju Dudhia. 

It's important to follow your state, county, and city protocols to legally demonstrate that you have taken all necessary steps to resolve the matter, even if the individual is judgment-proof.

"Judgment proof" is a term used to describe a person or entity that, despite owing a debt, cannot be forced to pay it back due to a lack of assets or income. In other words, the person or entity doesn't have enough money or property that could be seized to pay off the debt. Even if a creditor were to obtain a legal judgment against a judgment-proof person or entity, they would not be able to collect the debt because the debtor simply doesn't have the means to pay it back. I have firsthand experience of going after someone who was judgment-proof. Not a fun position to be in. 

 Hi @Kinju Dudhia

Before accepting tenants, did you ask them to fill out an application form? If yes, then it's important to review if they provided emergency contact information, an address, and a point of contact. Additionally, if you requested references, it's a good idea to reach out to them to gather insight into the tenant's whereabouts and contact info. 

I hope this helps.

**I failed to mention I am not a real estate attorney Mike... I just know enough to know enough...

 @Mike Montanye 

@Randall Alan is absolutely correct. It would be wise to speak with your CPA, Financial Advisor.