Nonperforming Loan Yield Calculator

NPL yields hinge on resolution recovery.

UPB (unpaid principal)

Purchase discount %

Expected recovery %

Months to resolve

Target yield (IRR)

0.4%

Purchase price

$1,375,000

Expected proceeds

$2,000,000

How the math works

Purchase = UPB × (1 − discount). Proceeds = UPB × recovery. Multiple = proceeds / purchase. IRR = multiple^(1/years) − 1.

$2.5M × 55% = $1.375M buy. Recovery $2M. 14 months = 1.17 yr. Multiple 1.45x = 37% IRR — attractive NPL return.

How to Use

Enter UPB (unpaid principal).
Enter purchase price discount %.
Enter expected recovery %.
Enter months to resolve.
Read target yield.

Frequently Asked Questions

NPL investing?

Buy delinquent loans at deep discount. Resolve via cure, payment plan, DPO, short sale, or foreclosure. Target IRR 15-30%+ reflects risk and time. Specialist operators (hedge funds, family offices) dominate; requires servicing infrastructure.

Pricing discount?

30-70% of UPB typical. 1st-lien residential NPL: 40-55%. Small balance commercial NPL: 30-45%. Sub-performing (paying but not current): 60-80%. Junior/subordinate NPL: 20-35%. Distressed sellers accept deeper discounts.

Resolution timing?

Cured/modified (fast): 3-9 months. Short sale: 6-18 months. Foreclosure: 12-36 months. Bankruptcy workout: 18-48 months. Time kills returns — fast resolution = higher IRR even at lower total recovery.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.