Note Buying – Non-performing Notes, They Can Be Yours
Posted on April 4, 2009 in the Mortgages category
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Start Your Note Buying Business Now
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.
A Note Buying Opportunity
Note Rate: 11.13%
Balance on the non-performing note: actually $62,957 – with a $66,885 payoff
Property Value: around $112-114,000 (estimate based on BPO and Zillow) LTV 50%
Note Buying – Exit Strategy 1
So the way I look at this: I could buy a $63K non-performing note 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.
You would around $12,000 on your $56K investment. Not bad for 2 months.
Your cash on cash return would be around 21% on your note buying investment, without even annualizing!
Note Buying – Exit Strategy 2
You can also reinstate the loan by having the borrower’s pay the loan current. A foreclosure notice may help you here.
If they are able to bring their defaulted mortgage current, you would get the reinstatement amount of $4,000 and on top of that a recurring monthly payment of $574. That is a total of $11,000 in your pocket within the 1st year. A 19% return!
If the borrower refinanced within 3 years you would get a 14.6% return on your note buying investment. (to calculate, you would amortize the return over 3 years)
And finally, since you have a 50% LTV, even if you end up taking the property, you swould still have a good amount of equity.
One of the many ways to profit from note buying…
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