Note Buying Parameters - Posted by Charles Steed

Posted by Michael Morrongiello on February 11, 2001 at 21:22:17:

Yield requirments vary along with the credit worthiness of the payor on the note. There are some “A” credit owner occupied residential deals we are currently purchasing with yields under 9%. Thats right under 9% ! These are VERY strong well secured deals.

However to say that this 9% yield would be a typical required yield for residential owner occupied product would be a misstatement since we don’t see a whole lot of “product” that might ever fit these parameters.

Credit, note rate, seasoning, down payment paid, etc. ALL are issues that invariably will come into play when establishing a return for a note. Also remember that “guidelines” are just that, they are general guidelines and not always carved into stone.

Michael Morrongiello

Note Buying Parameters - Posted by Charles Steed

Posted by Charles Steed on February 11, 2001 at 14:31:09:

I’m interested in learning the current criteria for the various security backing paper. What kinds of yields are institutional buyers seeking for prime first position notes secured by:

  1. Residential single fam.
  2. Rental property up to 4 units
  3. Raw Land
  4. Building lots w/ improvements
  5. Commercial buildings
  6. Mobile homes w/ land
  7. Mobil homes on leased space

I understand that there are many additional variables to consider such as LTV, ITV, price, down payment, buyer’s credit, interest rate, number of payments made, etc. So I ask for ballpark estimates for yield under relatively favorable conditions. Any input is welcomed.

Re: Note Buying Parameters - Posted by NC Paul

Posted by NC Paul on February 12, 2001 at 20:04:57:

I have found several buyers willing to deal around 15% with not-so-good credit. (Not to be confused with “tore-up from the floor up” credit mind you.) What is not-so good credit? That just depends on the note buyer! From what I have seen, 15% is a common yield they want to see. But yield isn’t everything, these people don’t have a “matrix” and can turn a deal down if they don’t like it for whatever reason. It doesn’t always make sense but hey, it is their money isn’t it?