What is Note Buying?

 

You can make good money buying notes.

Don’t be fooled by the unremarkable name. In real estate, a note is a very valuable thing. It’s a piece of paper that acts as a promise by the owner to pay the mortgage.

If you own a note, you don’t own the property yet, but you reserve the right to foreclose it.

In this video, filmed at the Platinum Mastermind in Curacao, Sue Nelson discusses the specifics of how to make money buying notes.

PERFORMING NOTES AND NON-PERFORMING NOTES

There are two types of notes: performing and non-performing notes.

With a performing note, the owner is keeping up with their mortgage payment. These offer you an opportunity for cash flow.

Notes can also be classified as non-performing, usually because the owner is not paying their mortgage. Non-performing notes are generally cheaper and you can either work out a deal with the owner or you can foreclose the property.

Both performing and non-performing notes can also be flipped. You can sell them to someone else for a profit.

BUY NOTES FROM THE BANK

Where do you buy notes? Usually, from the bank.

Banks are willing to sell you their notes because they are often in a disadvantageous position compared to a private entity like yourself. If they work out a special deal with a particular property owner, they would have to work out the same deal with everyone, and that’s not always possible.

As a private entity, though, you can do anything you want with the contract. It’s a win-win for you and the bank.

A CASE STUDY IN NOTE BUYING

In the video, our speaker Sue Nelson mentions a friend who owns 3,000 mortgage notes. He took over these loans from the bank, and 1,500 of them were non-performing notes.

He has never foreclosed on any of the 3,000 mortgages. He has always worked out a deal with all of these owners, thanks to plenty of creative thinking and being very informed about the tricks of the trade.

Notes are not a “set and forget” kind of investment. They do involve your time and energy. Still, the possibilities with note investing are only limited by your creativity. There is also plenty of information available on the topic, such as this website.

The MOBE Platinum Mastermind is where the most experienced mentors in investing and asset protection share their investment methods with fellow members. To learn more about the Platinum Mastermind, click HERE.

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