Non performing notes.

12 Replies

Good morning everyone.My name is Jaroslav Hlinka from New York and I live on Staten Island.My big dream is to become real estate investor.My biggest concern is to start investing in non performing notes.Few days ago,I have purchased my first a non performing note for,$2000 with $60000 UPB and market value of the house was $69000.The property is in Illinois and Robbins ave.The best think was that my Ofer was accepted. After that I got scare I did not know if that area is good,and main worry was how to contact home owner after contract will be sing up. I cancel transaction. What a idiot property is gone. I am asking for help. Is there enyone in my area who is investing in notes, that can help me to move forward I can pay for advise.Thank you.

@Jaroslav Hlinka as a beginner with no experience you could not have picked a more complicated way to invest.. although your Risk is nothing up front a small amount like 2k.

but a couple of small things

1. Illinois has very long and drawn out and costly foreclosure process.  Look for states that are deed of trust states with short foreclosure times.. IE   GA  MS  TX  CA  etc.

2. Network with those in the business I am sure there are some sort of meet ups there In NY.. And NY is also one of the worst states to try to foreclose in.

@Jaroslav Hlinka , you may not have made a big mistake. Just because someone bought the property doesn't mean it was a good deal.

If it was in Robbins, IL, it may not have been in the best neighborhood. When you are investing out of state, I think it's better to partner with someone who can give you information about the area. Nothing beats boots on the ground. 

@Jaroslav Hlinka I concur with @Mindy Jensen . I'm familiar with Robbins IL. There are a very few blocks in Robbins that are B class areas. Robbins is mostly C and D class.

If you are going to invest out of state ask questions on Bigger Pockets. Someone in the area you are interested in may see the question and respond. 

I and other members respond when I have information pertaining to comments in forums. 

                               Enjoy as you prosper..... 

The last thing on earth is to just buy a note based on its price. There is so much more to look at, and so many ways to lose money. Did you check taxes or liens? Did you find a realtor to drive by? It might be a vacant lot with $20k in taxes due, hardly a good deal, no matter how low the price. If you have no experience, its best to JV with an experienced investor to know what to look for and have them teach you the ropes.

Good luck!

Why is a non-performing note attractive to you? There is no cash flow from it and the only way to realize any returns from it is to either wait for the borrower to start paying (or sell the property), or you'll have to follow through the foreclosure procedures and a process to fix up and resell the property that note was associated with. Evaluate your risk tolerance, investment objective, time frame, additional money and necessary efforts to start getting returns again. If you couldn't see a clear way and be prepared to handle what comes along from A to Z, it was probably good that you did not purchase that note.

The pricing on Non Performing loans has gotten much more aggressive in the last year, in many cases you can buy a performing note for not much more.

@Mike J. I see the price increase driven by both reduced supply and increased demand. It seems like NPN's have gotten trendy right now and there are a lot of new investors bidding for fewer assets.

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