Investing in Non Performing Loans (NPNs)

[patientrenter]

[quote=EconProf]..
I recall the early and mid-1990s apartment market in San Diego. When gloom and doom prevailed as apartment vacancies were in the teens, a few brave souls bought buildings for $30k per door, slashed rents, and filled up, much to the distress of mom and pop owners who refused to face market realities. Many of them suffered 30 to 40% vacancy rates rather than cut rents. Most went under, adding to the inventory for the bottom-fishers to scoop up.[/quote]

And some people insist on calling this the end-of-the-world RE-driven recession. It’s still way less severe than even the last RE downturn.

[clearfund]

We look at buying our NPN notes at a max of 70% of TODAY’S value. Thus, our basis is well below today’s value when/if we end of owning the property.

We also ensure that our cost of the project (foreclosure, renovation, leasing, ti, etc) is well below replacemtn value.

Lastly, we require that when we stablize the property with conservative assumptions (high rental factor, below today’s market rents, etc) we will earn a minimum 12% all cash yield.

Therefore, using the above we are buying at values that will provide us with high all cash yields for a possible long term hold…no flipping expected!!!

Alternatively, if we buy a note at 50% of face (70% ltv on today’s value) and we can get an owner to pay us cash flow and then ‘cut him a break’ at a 75%-80% payoff down the road we make out with a 50%+ profit plus cash flow….

When the market returns at some point, we simply refinance all our our cash out of the deal at the new crazy valuations, cash flow, or sell.

Just use fundamentals of commercial to make sound real esatate purchases and all will work out. But one must pay all cash (or a very high %) and have a 5+ year horizon (preferrably 10 years) and you will look back very happy.

This is not a game for high LTV players, be conservative with underwriting/acquisition strategy until things turn around.

Lastly, re: AZ/NV the fear is exactly why you should buy quality commercial property there now (phoenix over vegas is I had to pick). Its a boom/bust town and you can get incredible deals if you use the above type of transaction structure.

FLIPPING IS NOT INVESTING: BE AN INVESTOR, NOT A FLIPPER!!!

[clearfund]

We look at buying our NPN notes at a max of 70% of TODAY’S value. Thus, our basis is well below today’s value when/if we end of owning the property.

We also ensure that our cost of the project (foreclosure, renovation, leasing, ti, etc) is well below replacemtn value.

Lastly, we require that when we stablize the property with conservative assumptions (high rental factor, below today’s market rents, etc) we will earn a minimum 12% all cash yield.

Therefore, using the above we are buying at values that will provide us with high all cash yields for a possible long term hold…no flipping expected!!!

Alternatively, if we buy a note at 50% of face (70% ltv on today’s value) and we can get an owner to pay us cash flow and then ‘cut him a break’ at a 75%-80% payoff down the road we make out with a 50%+ profit plus cash flow….

When the market returns at some point, we simply refinance all our our cash out of the deal at the new crazy valuations, cash flow, or sell.

Just use fundamentals of commercial to make sound real esatate purchases and all will work out. But one must pay all cash (or a very high %) and have a 5+ year horizon (preferrably 10 years) and you will look back very happy.

This is not a game for high LTV players, be conservative with underwriting/acquisition strategy until things turn around.

Lastly, re: AZ/NV the fear is exactly why you should buy quality commercial property there now (phoenix over vegas is I had to pick). Its a boom/bust town and you can get incredible deals if you use the above type of transaction structure.

FLIPPING IS NOT INVESTING: BE AN INVESTOR, NOT A FLIPPER!!!

[clearfund]

We look at buying our NPN notes at a max of 70% of TODAY’S value. Thus, our basis is well below today’s value when/if we end of owning the property.

We also ensure that our cost of the project (foreclosure, renovation, leasing, ti, etc) is well below replacemtn value.

Lastly, we require that when we stablize the property with conservative assumptions (high rental factor, below today’s market rents, etc) we will earn a minimum 12% all cash yield.

Therefore, using the above we are buying at values that will provide us with high all cash yields for a possible long term hold…no flipping expected!!!

Alternatively, if we buy a note at 50% of face (70% ltv on today’s value) and we can get an owner to pay us cash flow and then ‘cut him a break’ at a 75%-80% payoff down the road we make out with a 50%+ profit plus cash flow….

When the market returns at some point, we simply refinance all our our cash out of the deal at the new crazy valuations, cash flow, or sell.

Just use fundamentals of commercial to make sound real esatate purchases and all will work out. But one must pay all cash (or a very high %) and have a 5+ year horizon (preferrably 10 years) and you will look back very happy.

This is not a game for high LTV players, be conservative with underwriting/acquisition strategy until things turn around.

Lastly, re: AZ/NV the fear is exactly why you should buy quality commercial property there now (phoenix over vegas is I had to pick). Its a boom/bust town and you can get incredible deals if you use the above type of transaction structure.

FLIPPING IS NOT INVESTING: BE AN INVESTOR, NOT A FLIPPER!!!

[clearfund]

We look at buying our NPN notes at a max of 70% of TODAY’S value. Thus, our basis is well below today’s value when/if we end of owning the property.

We also ensure that our cost of the project (foreclosure, renovation, leasing, ti, etc) is well below replacemtn value.

Lastly, we require that when we stablize the property with conservative assumptions (high rental factor, below today’s market rents, etc) we will earn a minimum 12% all cash yield.

Therefore, using the above we are buying at values that will provide us with high all cash yields for a possible long term hold…no flipping expected!!!

Alternatively, if we buy a note at 50% of face (70% ltv on today’s value) and we can get an owner to pay us cash flow and then ‘cut him a break’ at a 75%-80% payoff down the road we make out with a 50%+ profit plus cash flow….

When the market returns at some point, we simply refinance all our our cash out of the deal at the new crazy valuations, cash flow, or sell.

Just use fundamentals of commercial to make sound real esatate purchases and all will work out. But one must pay all cash (or a very high %) and have a 5+ year horizon (preferrably 10 years) and you will look back very happy.

This is not a game for high LTV players, be conservative with underwriting/acquisition strategy until things turn around.

Lastly, re: AZ/NV the fear is exactly why you should buy quality commercial property there now (phoenix over vegas is I had to pick). Its a boom/bust town and you can get incredible deals if you use the above type of transaction structure.

FLIPPING IS NOT INVESTING: BE AN INVESTOR, NOT A FLIPPER!!!

[clearfund]

We look at buying our NPN notes at a max of 70% of TODAY’S value. Thus, our basis is well below today’s value when/if we end of owning the property.

We also ensure that our cost of the project (foreclosure, renovation, leasing, ti, etc) is well below replacemtn value.

Lastly, we require that when we stablize the property with conservative assumptions (high rental factor, below today’s market rents, etc) we will earn a minimum 12% all cash yield.

Therefore, using the above we are buying at values that will provide us with high all cash yields for a possible long term hold…no flipping expected!!!

Alternatively, if we buy a note at 50% of face (70% ltv on today’s value) and we can get an owner to pay us cash flow and then ‘cut him a break’ at a 75%-80% payoff down the road we make out with a 50%+ profit plus cash flow….

When the market returns at some point, we simply refinance all our our cash out of the deal at the new crazy valuations, cash flow, or sell.

Just use fundamentals of commercial to make sound real esatate purchases and all will work out. But one must pay all cash (or a very high %) and have a 5+ year horizon (preferrably 10 years) and you will look back very happy.

This is not a game for high LTV players, be conservative with underwriting/acquisition strategy until things turn around.

Lastly, re: AZ/NV the fear is exactly why you should buy quality commercial property there now (phoenix over vegas is I had to pick). Its a boom/bust town and you can get incredible deals if you use the above type of transaction structure.

FLIPPING IS NOT INVESTING: BE AN INVESTOR, NOT A FLIPPER!!!

[Jumby]

clearfund, how did you find this thread? i see you are new here….google alerts?

[Jumby]

clearfund, how did you find this thread? i see you are new here….google alerts?

[Jumby]

clearfund, how did you find this thread? i see you are new here….google alerts?

[Jumby]

clearfund, how did you find this thread? i see you are new here….google alerts?

[Jumby]

clearfund, how did you find this thread? i see you are new here….google alerts?

[clearfund]

I have been actively reading it for over a year + but have never registered/commented till now.

[clearfund]

I have been actively reading it for over a year + but have never registered/commented till now.

[clearfund]

I have been actively reading it for over a year + but have never registered/commented till now.

[clearfund]

I have been actively reading it for over a year + but have never registered/commented till now.

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