Buying Defaulted Mortgages – Don’t Focus On One Exit Strategy
Posted on February 27, 2009 in the Real Estate category
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The other day I had a conversation with a new Note Buyer who informed me that after a long career in wholesaling properties, he was going to start investing in buying defaulted mortgages.
When he said to me “Dean, the reason why I want to get into buying defaulted mortgages is not only for the cash flow, but I want to keep these people in their properties. This is what worried me.
Don’t get me wrong. I’ll be the first to admit that Humanity counts. But…
Don’t forget about the bigger picture here.
Don’t Try to Use Only One Exit Strategy For Buying Defaulted Mortgages
It will not work.
A SINGLE exit strategy for the defaulted mortgages that you buy may be what you want to pursue. (in this example he was looking to hold all the notes as cash flow by modifying them and getting them to re-perform).
Buying Defaulted Mortgages: Multiple Exit Strategies Are Needed
In order to invest successfully in defaulted mortgages, you need to be like Rafael Nadal.
With an amazing serve, grass court and clay court experience, and a great forehand, Nadal is a well balanced tennis star.
You should have the same approach when you are buying defaulted mortgages. Have the ability to pursue multiple exit strategies at once in your note buying business.
Be careful you don’t “stick yourself” with one note buying strategy.
When Buying Defaulted Mortgages, Use Foreclosure As A Tool
Sometimes it takes starting a foreclosure action to get a borrower to cooperate with you in getting a loan modified.
And Why?
The foreclosure action acts like a wake up call to someone who has been missing payments on a regular basis. That in combination with your help in their loan modification may be just what they need to get going to work their way out of their situation.
Don’t be like the investor I talked to. Don’t fall into that trap.
If you want to be successful in your Defaulted Mortgage Buying business, 1 Exit Strategy is not enough.
To do well in the note buying business, know all of your 5 Exit Strategies.
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