How do I find mortgage notes that I can buy?

Question

What does everyone think about buying mortgage notes?

Is there profit in doing this?

I understand the concept but cannot figure out how to find and negotiate the notes themselves?

Is there a forum where notes are sold? Do I just start calling up banks/credit unions?

Any advice would be appreciated.

Chris Seveney · Answer

@Patricia Lashley

It’s like any business, it has startup costs, takes a lot of hard work and time before you will be profitable. If it’s more of a hobby and you want to buy some here and there it can be done.

I think where people fail is they get caught up in the rush when starting and believing it’s simple or get rich quick scheme as that’s what many gurus lead you to believe but that is farthest from reality.

I also recommend people diversify their portfolio, so if you are doing notes, I recommend doing other investments as well.

Bob E. · Answer

@Patricia Lashley  Keep in mind that Note investing is basically subprime lending and we are headed into a recession.  Give it 18 months and you are likely to start seeing non performing notes for sale.

Are you familiar with the business at all?  There are real issues you need to be aware of to properly validate the collateral for a loan.

Peter Halliday · Answer

asking in a form for note investing what everybody thinks is a big one sided. Fans for sure.  I started like many as a passive investor, and then got educated myself, and had experience in other real estate areas.

There are good places to get educated.  Some great podcasts, books, and courses.   Some bad places too.  Like everything it’s work, and takes time to learn.  I feel it’s been worth it.   Glad that I started.  Feel the real question is not just asset class, but active or passive.

Jay Hinrichs · Answer

@David Garner   has some good content that he shares that is perfect for beginner note investors.

Bill B. · Answer

Many notes wee probably regular rates (2-3%) plus a couple percent for being higher risk (4-5%) and now that’s lower than the best borrowers are paying. In the world of declining interest rates this was a plus. In a world in increasing rates I’d want 3-5% above the highest rate you think good borrowers will be paying in the next 5 years MINIMUM. So put a floor around 12% effective interest rate? (By buying for less than amount owed) and I don’t think I’d touch anything with less than 30-40% equity.

I see borrowing to great borrowers paying 6%+ easy in the near future if not today. So get paid for the risk.

David Garner · Answer

Thanks, Jay! Always happy to help @Patricia Lashley... feel free to DM me for some pointers to good content.

Taylor L. · Answer

Paperstac is gaining in popularity. @Chris Seveney has a pretty awesome note investing Facebook group as well, I believe I've seen people discuss deals there.

How do I find mortgage notes that I can buy?

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