Why non performing notes?

Non performing notes have gained traction lately and is picking up pace amongst beginner real estate investors. Because of their passiveness and incredible rates of return real estate note investing can be a very profitable niche. In this article, I will share 3 reason why investing in non performing notes need to be in your portfolio.

Reason 1. Investing in non performing notes creates a passive investment where you the investor are not responsible for tenants and toilets. Being the owner of the note, you are the bank. Would you expect the bank to be responsible for late night phone calls from tenants mentioning that dishwasher clogged up and leaked all over the kitchen floor? The homeowner takes care of that stuff. Its their home and their responsibility! Your job as a note investor is to get them to repay their loan and collect checks until they pay off their legal obligation.

Reason 2. Mortgage notes are collateralized by real estate. Numerous potential private investors always ask how is their money backed up, meaning what’s the collateral on their investment. We say if the person doesn't pay on their loan, we can legally foreclose on their home. This means we recope the collateral, and there are so many exit strategies, these will be described on the last point. We’ve had many instances where we have had to foreclose because the homeowner told us to pound sand. Usually we sell the property at the sheriff's sale, or we will rent out the house for passive cash flow.

Reason 3. Amazing rates of returns based on numerous exit strategies. This is my favorite reason to invest in notes other than helping so many distressed homeowners in the process. Depending on the exit strategy, there are many ways you can make passive and large amounts of money on deals with notes. For example, you have to take the property to foreclosure and sell it. Typically we buy the note for fifty cents on the dollar and sell it for about ninety sense and collect the spread after attorney fees and such. If you reinstate the note and collect five months of back payments, monthly payments and then a refinance, thats another pay stream. You receive money now, money monthly and money in the future!

There are so many more reasons to invest in non performing mortgage notes, but these are my favorite. In later videos, I’ll go over more exit strategies in future videos and show you how to make more money with notes.

Thank you for sharing this video and liking it. I look forward to your comments below!

To your success!

Matthew Hell

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