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Note Yield Calculator

Evaluate the true yield, risk profile, and cash-on-cash return of a performing seller-financed note before you buy.

True Yield (IRR) See your actual annualized return based on purchase price, not just the note's face rate.
LTV & ITV Analysis Understand your collateral coverage — Loan-to-Value and Investment-to-Value at a glance.
Cash-on-Cash Return Annual cash flow as a percentage of your investment — the metric that matters for SDIRA capital.
Total Profit Projection Total payments remaining, total profit, and ROI over the life of the note.
Risk Scoring Automated risk assessment based on LTV, seasoning, discount depth, and remaining term.
Discount Analysis See exactly how much of the face value you're buying at, and what that discount means for yield.

How to Use This Calculator

  1. Enter the note details — unpaid principal balance, interest rate, remaining term, and monthly payment from the note's current amortization schedule.
  2. Set the purchase price — what you'd pay to acquire the note. Most performing notes trade at 70-95% of UPB.
  3. Add collateral value — the current estimated value of the underlying property or asset for LTV calculations.
  4. Include seasoning — how many months the borrower has been paying on time. More seasoning = lower risk.
  5. Review your results — yield, LTV, risk score, cash flow, and profit projections update instantly.

Note Details

$200,000
$5K $2M
$
7.5%
1% 15%
240 mo
6 mo 30 yrs
$1,612
$
Auto-calculated from UPB, rate, and term

Purchase & Collateral

$170,000
$5K $2M
$
Buying at 85.0% of face value ($30,000 discount)
$280,000
$10K $5M
12 mo
0 mo 10 yrs

Yield Analysis

Investor Yield (IRR) 10.2% Your annualized return based on purchase price
Cash-on-Cash Return 11.4% Annual cash flow / purchase price
Note Face Rate 7.5% Borrower's contract rate
Total Payments Remaining $386,880 All future P&I payments
Total Profit $216,880 Total payments minus purchase price

Risk & Collateral

Low Risk Moderate High Risk
Low Risk Strong collateral coverage with good seasoning
Loan-to-Value (LTV) 71.4% UPB vs. collateral value
Investment-to-Value (ITV) 60.7% Your purchase price vs. collateral value
Equity Cushion $110,000 Collateral value minus your investment
Seasoning 12 months On-time payment history

Visual Breakdown

Investment vs. Return

How your purchase price compares to total payments you'll collect

Total Return $386,880
Purchase Price $170,000
Profit $216,880

Yearly Cash Flow & Balance

Annual income collected and remaining note balance over time

Cash Flow Breakdown

Year 1 $19,344 $1,612/mo
Years 1-5 $96,720 $1,612/mo avg
Years 1-10 $193,440 $1,612/mo avg
Full Term $386,880 Total over 20 years

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Note Investing FAQ

Common questions about buying seller-financed notes, how yield works, and what the numbers mean for your portfolio.

A performing note is a loan where the borrower is currently making payments on time and in full. Performing notes are the most common type traded in the secondary market. They offer predictable, passive income backed by real collateral — making them attractive for SDIRA investors and those seeking yield outside of stocks and bonds.

When you buy a note at a discount (below its unpaid principal balance), your effective yield is higher than the contract rate because you're collecting interest on the full UPB while having paid less. For example, buying a $200K note at $170K (85%) with a 7.5% rate may give you an effective yield of 10%+ depending on the remaining term.

LTV (Loan-to-Value) compares the note's unpaid balance to the collateral value — it tells you the borrower's equity position. ITV (Investment-to-Value) compares your purchase price to the collateral value — it tells you how much collateral coverage you have as the investor. ITV is typically more relevant to note buyers because it reflects your actual exposure.

Seasoning refers to how long the borrower has been making on-time payments on the note. A note with 12+ months of consistent payments is considered well-seasoned and carries lower risk because the borrower has demonstrated ability and willingness to pay. Unseasoned notes (0-6 months) trade at deeper discounts due to higher uncertainty.

Yes. Self-Directed IRAs (SDIRAs) can invest in real estate notes, promissory notes, and other private debt instruments. All payments flow back into the IRA tax-deferred (traditional) or tax-free (Roth). There are $120-150B+ in SDIRA capital actively seeking yield from assets like seller-financed notes. HonestDeed notes are structured to be SDIRA-compatible.

If the borrower prepays the note, you receive the remaining unpaid principal balance in full. Since you bought the note at a discount, this means an immediate windfall — you collect the full UPB while having paid less. Early payoff actually increases your effective yield because you earn the discount profit over a shorter period.

No. This calculator provides estimates for informational and educational purposes only. Actual yields depend on borrower performance, prepayment behavior, collateral value changes, and other factors. Risk scores are simplified assessments — always perform your own due diligence including title search, property valuation, and payment verification before purchasing any note.