Pluses Vs Minuses.... what are they?

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Posted by Michael Morrongiello on August 05, 2008 at 12:29:29:

In Reply to: Note for sale - what's a fair price? posted by Joshua Martino on August 05, 2008 at 08:45:24:

Joshua:
IF the ORIGINAL # of payments was 314 and there are still 314 payments remaining it appears that this Note has now payment history associated with it.

Without more details about WHAT type of sale price the prperty SOLD for, the amount of cash down from the buyer, etc. - there is more RISK associated with such an unproven Note.

Regarding your calculations; if you choose a YTM - YIELD TO MATURITY requirement of 18% then that would discount the note down to $19,813.49

N= 314
I = 18%
PV= - 19,813.49
PMT = $300.00
FV= 0

The $19,813.49 you would fund for the purchase represents 50% of the oustanding current balance of $39,400.00

Your "ITV" investment to value will depend on the actual FMV -fair market value of the home. E.G. Lets say the home is valued at $48,000.00. Then the $19,813.49 / divided into the $48K FMV = 41% ITV

Credit, occupancy, condition, "pride of ownership", etc. - all are issues to have addressed in addition to READING and reviewing the relevant documents.

Now, lets say this home was sold with NO MONEY DOWN, to borrowers who are non owner occupant investors, who also are not personally liable to repay this debt, where the home is still vacant, is located in a marginal area and needs additioal fix up work, etc.

Without some "spin" or input on these cumulative issues- its hard to say whether investing $19K to buy this Note is a good deal or not or even "Fair"

Best to your success;
Michael Morrongiello
Paper Practioner
www.sunvestinc.com
Author of the following home study courses;

Paper Into Cash - The Convertible Currency - How to Effectively Create Marketable Real Estate Notes
&
The Unity of Real Estate & "Paper" - Advanced techniques for both the acquisition and disposition of properties using Real Estate "paper"



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