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
The Note Rate: 11.13%
Non Performing note balance: $62,957 payoff amount $66,885
Value of property: estimated $112-114,000 (value based on Zillow and the bank’s BPO) LTV 50%
Note Buying – Exit Strategy 1
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.
My return on my note buying investment would be 21% cash-on-cash, 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.
Reinstating the defaulted mortgage would cost your borrower $4,000 to reinstate, plus a monthly payment of $574. Within 1 year, you will have received $11,000, 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.
Many ways to profit from from you note buying investment…
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