Non Performing Note


The Asset

Smyrna, GA

BPO Value: $31,000

*SF Value:  $76,000



Non-Performing Note

Amount Paid for Note: $12,200

Closing Costs:  Included

Total Investment: $12,200


Exit Strategy

We purchased this non-performing note as an already foreclosed asset or Real Estate Owned (REO) from a Hedge Fund. The property was vacant but did not need any work as the previous owners had rehabbed it prior to getting a divorce. Our research showed the rents in the area were $725 per month. The plan was to sell the property to a retail buyer with seller financing.


Implementation of the Exit Strategy

We sold the property with seller financing for $76,167 with 10 percent down for 20 years. The monthly payment minus taxes and insurance yields a monthly cash flow of $623 for 20 years (240 months) or $149,520; all from a $12,200 investment.


The Final Numbers

Rent: $725

Taxes: $60

Property Management: $N/A

Insurance:  $42

Net Cash Flow: $623


A contingent strategy is to let the loan “season” for a year and then sell the Note on the secondary market to an institutional investor for approximately 90 percent of the Note value.