All Forum Posts by: Gabe K.

Our extensive research process resulted in a significant pay off this week. In September, 2015, we purchased a non-performing 2nd mortgage on a property in a desirable area of Pasadena, CA. The homeowner had not made a payment on it since 2008 and the current balance was approximately $53,000.

During the due research process, we discovered the homeowner was current on his 1st mortgage, which means he would likely want to keep the property and settle the debt. Further, we believed the note seller was unaware of the rapid appreciation in the property's neighborhood. Armed with this information, we were able to negotiate an amazingly low purchase price of $4,500 for the 2nd mortgage.

After loan servicing was transferred and collateral documents were received, we quickly made contact with the borrower to get a better understanding of his financial situation. We ended up accepting an offer from the homeowner to settle the balance of the loan for $40,000, after a discussion with our investor.

The return on this investment was $35,500 or over 750% in about 7 months.This is an exceptional outcome for any note investment. We believe this success is attributable to our extensive research process, detailed due diligence, and proactive borrower outreach.

Part of this investment was funded by a ROTH IRA, which means the gains were earned tax free. 

Great home looking for someone to make it theirs. Located close to Ashtabula Harbor, easy access to Rt 11, and in a solid neighborhood. Master bedroom with bath on main floor and 2 possibly 3 bedrooms up (bonus rm). This home has plenty of space to grow in but needs someone's tender touch to make it shine again. Come take a look to see if that someone is you! Seller financing available.

Additional details available here: Link

or call the listing agent MJ @ (440) 536-3761

Great opportunity to fix up a house. It does need extensive work and the low price reflects this. There is huge adjacent lot included also. Cash price listed..make an offer today! Seller financing available with $2000 down and $425/month. For access to the house, for questions, or to make on offer please call 800-849-3918 M-F. Please click on this link for more photos and info: Link to photos and more info

Great opportunity to fix up a house. It does need extensive work and the low price reflects this. There is a converted garage in the back of the property that you might be able to rent that out also. Cash price listed..make an offer today! Seller financing available with $2000 down and $350/month. For access to the house, for questions, or to make on offer please call 800-849-3918 M-F. Please click on this link for more photos and info: Link to website.

@Mike HartzogMike, I have ran into the same exact situation!

Hi Fellow BPers,

This is a success story about helping homeowners and profiting from a non-performing note backed by a 1st mortgage in Washington, DC. Here is the story:

The homeowners had a difficult 2011 when they both lost their jobs and their property's value plummeted by 65%. They defaulted on their mortgage and their lender wouldn't work with them. When we purchased their loan just over a year ago, they were fully employed and we gladly worked with them to modify their loan so they could keep their home. We started with a 12-month forbearance period and then reduced their principal balance by over $100,000 and lowered their monthly payment to only $679 for 15 years. Here are the numbers:

• Original loan balance: over $200,000
• Property value: $55,000
• Note purchase price: $34,000
• Total payments received during 12-month forbearance period: $20,000
• 12-month forbearance yield: 59%

Modified loan:

• 15-year fixed rate mortgage
• 9.50% interest rate
• $65,000 principal balance
• $679 monthly payment
• Yield-to-maturity: 23%

How does everyone like this investment we worked on? Thanks for viewing our post.

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You guys were correct in that we were the highest bidder so we own the house now.  Now we will help the resident to move out then assess the condition of the property.

I have self serviced some notes on non owner occupied properties and it was a terrible use of my time.  For $15-$30 per month you can pay someone to print statements, lick envelopes, and send reminders to borrowers. Your time is much better spent making money.

@Lawrence Robinson@Andy Luick Hi Guys, thanks for your input.  We manage discounted notes, so we paid much, much less than the $112k we are owed.  If we end up with the house or if we get paid out, it's going to be a win.

@Chet MazurThe lender sets the opening bid, up to the amount they are owed.

I will post the results when available. Thanks.

Hi Everyone, thanks for your replies.  When you bid at sheriff's sales you don't get any info provided to you, you have to make an assessment on your own, as you know.  I can only tell you that the house is owner occupied and looks well taken care of from the outside.

We are the foreclosing party and are seeking input from locals who bid at auction how much they think someone will bid. The estimated value is $140k but we are owed less than that, maybe $112k, which will be our bid.  Thank you.