Contractor · Chicago, IL · Member since 2017 · 102 posts · 181 votes
I am considering doing a raise to buy some distressed residential debt portfolios. They are preforeclosure. Well before I run head first into statutory protections. I have no interest in going through the foreclosure process with people. The strategy is buyouts.
Anyone out there have any advice or experience of what I might get sidelined by that I didnt anticipate? I have a lot of experience but as with anything you've never done before there are things you couldn't have thought of.
Investor · Jackson, NJ · Member since 2010 · 167 posts · 55 votes
6y
Yes we been buying pools of notes since 2010. What new investors often get confused on is the purchase of debt vs buying the property. In our space the investment is more about legal than the real estate. How solid is the collateral file, is there any other liens, what the state laws are on their debt license etc...
Investor · Jackson, NJ · Member since 2010 · 167 posts · 55 votes
6y
Yes we been buying pools of notes since 2010. What new investors often get confused on is the purchase of debt vs buying the property. In our space the investment is more about legal than the real estate. How solid is the collateral file, is there any other liens, what the state laws are on their debt license etc...
Investor · Jackson, NJ · Member since 2010 · 167 posts · 55 votes
6y
@Miao Wang you are buying the debt secured by the real estate not the hard asset. So if the debt goes into default, recourse is set by the terms of the promissory note. Often that is a Lien on the property. Which means you can go through the process of foreclosure.
If the borrower performs it is similar to rental however you are not dealing with the tenants, turnover, roof, maintenance etc. However you do not own the deed of the property so no appreciation.
If you buy the debt at a good discounted price you then can collect a great irr/yield for years. You then can sell the note easily.