Pros & Cons of Non-Performing 2nds

[Wesley Wells]

I was listening the recent episode of the Note MBA podcast (great resource) and they were discussing investing in non-performing 2nd liens. I became very intrigued on the topic but I wanted to get some feedback from active investors on the pros and cons of investing in 2nd liens. 

Any additionally resources on the topic you can send my way is greatly appreciated. Thanks in advance.

[Dave Van Horn]

@Wesley Wells

A lot of great points made above!

Two things I thought to add:

2nd liens can experience what is known as "phantom appreciation" - which is where equity comes back in the marketplace where the property is located on a partial or no-equity lien, which in turn raises the value of the 2nd mortgage.

You also have reinstatement rights in many states as a secured lien holder, which could open up opportunities with the 1st lien.