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clearfund
ParticipantBubba – The GSE Strips are guaranteed so no worry there. The reason for the interest rate is that because they are a zero-coupon note where you receive interest and principal at the maturity date.
Thus, they nearly always trade at a discount to the face value of the note to account for the lower IRR, etc of the zero coupon.
We invest/trade in this general area and are achieving north of 15% (some trades net us 40%+/yr) annual cash flow with investments back by GSE Bonds which are all guaranteed.
We trade in/out of the GSE Bonds around dividend dates so we capture excess levels of dividends with very short holding periods/exposure.
ParticipantBubba – The GSE Strips are guaranteed so no worry there. The reason for the interest rate is that because they are a zero-coupon note where you receive interest and principal at the maturity date.
Thus, they nearly always trade at a discount to the face value of the note to account for the lower IRR, etc of the zero coupon.
We invest/trade in this general area and are achieving north of 15% (some trades net us 40%+/yr) annual cash flow with investments back by GSE Bonds which are all guaranteed.
We trade in/out of the GSE Bonds around dividend dates so we capture excess levels of dividends with very short holding periods/exposure.
ParticipantWe 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!!!
ParticipantWe 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!!!
ParticipantWe 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!!!
ParticipantWe 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!!!
ParticipantWe 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!!!
ParticipantNot sure who this group is, however, If you know what you are doing you can achieve very high returns averaging in excess of 20%/year based on a reasonable workout. Given the size of the loan purchases, and the need to diversify, the best approach is to invest via a fund or pooled investment with an experienced management team.
With our funds/clients we have been buying non performing loans (mainly commercial property) in CA/AZ/NV and performing loans at steep discounts to the unpaid balance (these get us high current yield). Examples: Office building in Phoenix $8mm NON PERFORMING loan for $2mm; $4mm PERFORMING loan for $2.5mm
It is the best way to access the property market at a good discount to value and avoid the games/competition at the ‘retail’ level. We only buy ‘off market’ loans from local/regional lenders as the values are best.
2010 will be the sweet spot for buying loans at a sizable discount to the underlying property’s current value…
ParticipantNot sure who this group is, however, If you know what you are doing you can achieve very high returns averaging in excess of 20%/year based on a reasonable workout. Given the size of the loan purchases, and the need to diversify, the best approach is to invest via a fund or pooled investment with an experienced management team.
With our funds/clients we have been buying non performing loans (mainly commercial property) in CA/AZ/NV and performing loans at steep discounts to the unpaid balance (these get us high current yield). Examples: Office building in Phoenix $8mm NON PERFORMING loan for $2mm; $4mm PERFORMING loan for $2.5mm
It is the best way to access the property market at a good discount to value and avoid the games/competition at the ‘retail’ level. We only buy ‘off market’ loans from local/regional lenders as the values are best.
2010 will be the sweet spot for buying loans at a sizable discount to the underlying property’s current value…
ParticipantNot sure who this group is, however, If you know what you are doing you can achieve very high returns averaging in excess of 20%/year based on a reasonable workout. Given the size of the loan purchases, and the need to diversify, the best approach is to invest via a fund or pooled investment with an experienced management team.
With our funds/clients we have been buying non performing loans (mainly commercial property) in CA/AZ/NV and performing loans at steep discounts to the unpaid balance (these get us high current yield). Examples: Office building in Phoenix $8mm NON PERFORMING loan for $2mm; $4mm PERFORMING loan for $2.5mm
It is the best way to access the property market at a good discount to value and avoid the games/competition at the ‘retail’ level. We only buy ‘off market’ loans from local/regional lenders as the values are best.
2010 will be the sweet spot for buying loans at a sizable discount to the underlying property’s current value…
ParticipantNot sure who this group is, however, If you know what you are doing you can achieve very high returns averaging in excess of 20%/year based on a reasonable workout. Given the size of the loan purchases, and the need to diversify, the best approach is to invest via a fund or pooled investment with an experienced management team.
With our funds/clients we have been buying non performing loans (mainly commercial property) in CA/AZ/NV and performing loans at steep discounts to the unpaid balance (these get us high current yield). Examples: Office building in Phoenix $8mm NON PERFORMING loan for $2mm; $4mm PERFORMING loan for $2.5mm
It is the best way to access the property market at a good discount to value and avoid the games/competition at the ‘retail’ level. We only buy ‘off market’ loans from local/regional lenders as the values are best.
2010 will be the sweet spot for buying loans at a sizable discount to the underlying property’s current value…
ParticipantNot sure who this group is, however, If you know what you are doing you can achieve very high returns averaging in excess of 20%/year based on a reasonable workout. Given the size of the loan purchases, and the need to diversify, the best approach is to invest via a fund or pooled investment with an experienced management team.
With our funds/clients we have been buying non performing loans (mainly commercial property) in CA/AZ/NV and performing loans at steep discounts to the unpaid balance (these get us high current yield). Examples: Office building in Phoenix $8mm NON PERFORMING loan for $2mm; $4mm PERFORMING loan for $2.5mm
It is the best way to access the property market at a good discount to value and avoid the games/competition at the ‘retail’ level. We only buy ‘off market’ loans from local/regional lenders as the values are best.
2010 will be the sweet spot for buying loans at a sizable discount to the underlying property’s current value…
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