Getting Started In The Note Buying Business
Now that you are ready to start your note buying business, you are probably thinking about what kind of non-performing notes are out there. Let me show you an example.
Note Buying Opportunities
Note Rate: 11.13%
The non performing note balance: $62,957 – total payoff amount $66,885
Value of property: estimated $112-114,000 (value based on Zillow and the bank’s BPO) LTV 50%
The Note Buying Exit Strategy
One way to view this is: Buy a non-performing note for worth $63K at a 50% LTV for $56K.
If I could get the borrowers defaulted mortgage refinanced – I could probably payoff my loan for the full $66,885 within 60 days.
Making almost $12,000 on $56,000 wouldn’t be bad in 2 months.
The return on your note buying investment would be 21%. That isn’t even annualized.
A Second Note Buying Exit Strategy
Alternatively, I could encourage the borrower to bring their non-performing loan current (a foreclosure notice might work here) and see if they reinstate my loan at the last minute.
Assuming they do bring their defaulted mortgage current, that would mean a reinstatement payment of over $4,000 plus a monthly payment of $574 – for a total of almost $11,000 in income year 1 – or a 19% return.
Let’s say the borrower’s decide to refinance within 3 years. Amortizing the return over the 3 years would give you a 14.6% return on your note buying investment.
And finally, I might even end up controlling the property, in which case I’d have a good amount of equity that I could tap into.
One of the many ways to profit from note buying…
How to Buy Mortgages from Banks - Different Deal Sources
Topics: Mortgages, note buying course, non performing notes, buying notes