All Forum Posts by: Ray Trounday

I am working on a wholesale deal and need some guidance at arriving at ARV. Here are the comparables that I am working from:

Subject property:   3/2; 1470 square feet; Average but dated condition; Build in 1974 and 1975. Just needs updated floors; interior/exterior paint with update cabinetry estimate repairs to run 15 -20k; Seller has agreed to a 335k sale; Price per square foot 227 sq foot

Comparables:

Property #1: 3/2; 1293 square feet; .1 mi frm subject property; Property was rebabbed; nice curb appeal

Sold as a REO back in 7/17 for 336k; rehabbed now in escrow at 400k; DOM 9 days; Price per square foot @ escrow price: $309/sq ft

Property #2: 3/2; 1694 square feet; .1 mi from subject property; Remodelled kitchen with average curb appeal

Retail sale: list price $394,900; Sold at $395,000 on 8/15/2017; DOM 2 days; Escrow 30 days; Price per square foot 232.90

Property #3: 3/2; 1893 square feet; .1 mi from subject property; comparable in condition to subject property

Retail sale; List Price 379,999;  Sold at $380,000 on 8/23/17; DOM: 25 days Escrow: 30 days; Price per square foot 200.74

Thoughts on arrving at ARV?

Thanks

Ray

Excellent.  Thanks Bob and Joshua

Looking for sage advise from seasoned note investors, what are some the criteria that you use when evaluating a partial purchase of a performing note.  I suspect that is the much the same criteria when purchasing the full note.  Are there any nuances with partials that I should be aware of?

Thanks Linda!

Thanks Chris.  Outside of servicing fees to hold the note, what expenses are you referring to since in my understanding the all the significant expenses are paid by the borrower (property tax, insurance, maintenance) for a performing note.  I can only think of loan servicing 

Now for non-performing, it could be a whole different ball game since they are not receiving any cash flow whatsoover and the lender is absorbing the cost until they can get the borrower to reperform or the lender is forced to foreclose which eats away on the ROI.

-Ray

Makes sense.  So in the case of a non-performing note would it simply be (Amount sold deducting the foreclosure and hold costs)/69500 x 100.

I am getting myself confused between Yield and ROI. For illustration purposes, lets say that we are evaluating the following note:

Original Principal Balance: $100,000

Interest Rate: 5%

Term: 360

Payment (-536.82) Calculated

Lets say that the the above note is available in the secondary market parameters as follows with10 payments made:

Unpaid Balance:  98,976

Remaining Payments: 350

As a savvy investor, I am looking to buy the balance of the payments at a discount 70% of the Unpaid balance: or $69,500

that would improve my Yield from 5.0% to 8.55% based on inputting the parameters into by HP10ii

My question is how would I arrive at ROI? And is ROI only realized once I receive a payment? So, on initial purchase my ROI is 0

Understood.  Good point when you think of the lien position of the note.  Do you think of it as Note position or Lien position?

Thanks Tim.  

Basically, if I asked you what are the type of notes in the secondary market available to investors would you say:

1. Performing, Sub-Performing, or Non-Performing

or

2. Fixed Rate, Adjustable, Balloon