Investing in non performing notes

Tax Liens & Mortgage Notes
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Investing in non performing notes

Amod KarvePro Member
Member since 2020 · 21 posts · 7 votes

it feels like non performing notes might be a good way to get into rental properties at a good price. Have folks here found it to be a profitable arena. Any advice for a newbie to note investing. I’ve invested in note funds before so have some limited experience, although this might be a completely different ballgame. Any advice appreciated.

thanks

Amod

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  • Chad U.
    Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
    3y
    Quote from @Amod Karve:

    it feels like non performing notes might be a good way to get into rental properties at a good price. Have folks here found it to be a profitable arena. Any advice for a newbie to note investing. I’ve invested in note funds before so have some limited experience, although this might be a completely different ballgame. Any advice appreciated.

    thanks

    Amod

    Check out preREO.com.  They sell non performers geared towards investors and guide you through the process.
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  • Bob Malecki
    Investor · Kingston, WA · Member since 2008 · 1k+ posts · 1k+ votes
    3y

    yes, your supposition is correct but the best deals are far behind us at this time. Our next recession in the US may provide some reasonable volume of npls, but that depends on many factors. 

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Amod Karve

    I would go the route of Chad mentioned.

    Reason why is to setup your systems and amount of work you need to do to get setup on note investing will be very cumbersome - so if you value time then it's better to get a preReo or get a REO

    If your ok with putting in the time then yes to notes.

    Over past year have found it very hard to find one off deals and any trade less than $500k pricing has not been appealing

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  • Amod KarvePro Member
    OP
    Member since 2020 · 21 posts · 7 votes
    3y

    Thanks folks, I'll take a look.

    Amod

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  • Rolly Weaver
    Helen, GA · Member since 2015 · 96 posts · 68 votes
    3y

    There is an older, but good book that might be good for you: 
    "Invest in Debt"

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  • John Femenia
    Lender · New York, NY · Member since 2018 · 18 posts · 4 votes
    3y

    NPLs are a good way to make money in estate, but yuo'll need the cash avaialable to buy the note as financing is very tough to come by. Also, make sure you have a really good foreclosure attorney. Also, I would stay away from occupied properties.  Eviction adds more complication.  Also, don't pay more than 50% of value for an NPL.   Good luck

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  • Kevin Crowell
    Real Estate Professional · Mansfield, MA · Member since 2012 · 74 posts · 28 votes
    3y

    @Amod Karve

    Non performers can be profitable, but caveat emptor (buyer beware). As John and Chris said above, you need a good FCL attorney above and it does take time. I know with myself, I misjudged the time it took and even didn't even realize the due diligence it would take ($$). While it is profitable, you need to cross your t's and dot your i's as well as have a good team around you. And I cannot stress TEAM enough! Good luck with everything. 

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  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    3y

    It can be a very profitable way to get into real estate. Although right now, there aren't very many non performing notes at least compared to what there were a while back and especially compared to shortly after 08.

    Podcast Guest on Show #121
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  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    3y
    Quote from @Amod Karve:

    it feels like non performing notes might be a good way to get into rental properties at a good price. Have folks here found it to be a profitable arena. Any advice for a newbie to note investing. I’ve invested in note funds before so have some limited experience, although this might be a completely different ballgame. Any advice appreciated.

    thanks

    Amod

    Are you speaking about residential notes or commercial notes?  There’s a world of difference.
    Private Mortgage Financing Partners, LLC
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  • Amod KarvePro Member
    OP
    Member since 2020 · 21 posts · 7 votes
    3y

    Residential notes at this point as my commercial rei experience is zero.

    0Reply
  • Jamie Bateman
    Investor · Baltimore County, MD · Member since 2014 · 466 posts · 439 votes
    3y

    Here is a blog post we did on turning an NPL into a rental: https://www.biggerpockets.com/...

    It seemed like that is what you were asking about, specifically. 

    I could update the post again, as the #s are better now than they were 2 years ago. The rent is higher now and we did a cash-out refi after the property value went way up. (Some of the links in that blog post I linked to are broken since we moved our website, but the whole blog post can be found on our new site.)

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  • Amod KarvePro Member
    OP
    Member since 2020 · 21 posts · 7 votes
    3y
    Quote from @Chris Seveney:

    @Amod Karve

    I would go the route of Chad mentioned.

    Reason why is to setup your systems and amount of work you need to do to get setup on note investing will be very cumbersome - so if you value time then it's better to get a preReo or get a REO

    If your ok with putting in the time then yes to notes.

    Over past year have found it very hard to find one off deals and any trade less than $500k pricing has not been appealing


     Hi Chris, 

    I signed up for PreREO, but I'm not entirely sure how it saves time. I believe I still need to do due diligence on the notes (or am I missing something). On that note, do most people here have a team that you rely on for due diligence? If so, how does your team look like?

    Thanks for all the help so far. I am learning a lot!

    Amod

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  • Amod KarvePro Member
    OP
    Member since 2020 · 21 posts · 7 votes
    3y

    Also, I would really love to learn hands on about note investing. If anyone would like to be my mentoring partner and show me the ropes, I'm happy to bring the funding and share a cashflow / profit percentage (with the mentoring partner) as they see fit for the deal. I hope this will be a win-win for both of us as I get to learn hands on and the mentoring partner gets to share a piece of the profit without having to fund the deal.

    Please DM me if this sounds appealing.

    Thanks

    Amod

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  • Rafael Go
    Member since 2022 · 5 posts · 0 votes
    3y

    @Amod Karve hello, I was just curious as to your experience with preREO. Did you have a successful turnout? I’m considering signing up

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y
    Quote from @Rafael Go:

    @Amod Karve hello, I was just curious as to your experience with preREO. Did you have a successful turnout? I’m considering signing up


     i believe signing up is free on the website and you have no commitment, so you can sign up and see if there are any deals on there. 

    7e investments53 Reviews
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