Money Blog - Buying notes for high yield

This week we're going to see how much we can pay for a note to hit our yield target, and how to push that yield even higher!


THE SCENARIO:

Let's take a closer look at ways I could buy a note. Like most bigger-ticket items, notes often have prices that are negotiable - you just have to know that you can offer something other than the asking price, and away you go.

First off, I'll assume that I've saved up $25,000 so that's the most I can spend. I'm looking to buy the same note as last week. To recap, that note has 244 monthly payments of $319.35 left, the loan's interest rate is 7%, and Bob (the borrower) currently owes $41,500. For the purposes of these calculations, I have to assume that Bob will continue to pay as normal until the debt is completely gone.

a) If I wan... Read more...