Most of the NPNs we see have UPB which exceeds value. That being the case, your bid would be a percentage of value. You would take your bid + holding costs over the foreclosure time period into account. Being a wholesaler, you probably have a good idea of what you would need to be into it for. The downside to NPN is that you don't get a look inside the box until you take title through deed in lieu or foreclosure, so your bid should build in the additional risk factor of the unknown interior and structural condition. In other words, it's hard to know how much work it needs so you need to be conservative and plan for the worst.
The consideration of income stream value applies to NPN primarily in a reinstatement exit or modification scenario. When you go to foreclose, the borrower has an opportunity to reinstate. I calculate what the yield on the loan would be (at my bid price - arrears) if they did that. Usually it is OK, but if you are buying a hamp modified loan which has an interest rate of 2%, your yield would likely be low and would represent a risk. The question then becomes how likely you think this is, and that is largely a factor arrears. If the arrearage is small, then there is a significant risk.
