Real Estate Investing Blog

One way that some real estate investors generate wealth is to buy notes. When it comes to buying notes, what you’re really purchasing is the promissory note for the property, not the property itself. Once you own the promissory note, you have a variety of options available to you.

Ultimately, though, if you are going to be buying notes as a part of your real estate investment business, you’re going to want to:

1. Be sure that you are reviewing the actual loan documents so that you can determine the outstanding balance and the payment terms that were set out.
2. Be sure that you know how much interest has been paid thus far.
3. Be sure that you are aware of the next payment due date.
4. Be sure that you know that the loan is insurable.
5. Be sure that you know the current value of the property that you are buying the note for.
6. Be sure that the actual mortgage will be assigned to you.
7. Be sure that the promissory note is endorsed over to your real estate investment business.
8. Be sure that the promissory note is turned over to you.
9. Be sure that all of the details are documented.
10. Be sure that your attorney has looked over all of the paperwork so that you know what you’re getting and that everything - including notifying the homeowner and insurance companies involved of the transaction - has been done properly.

There’s far more to learn and understand about buying notes - the process, the value and what your rights are; if you’re familiar with buying notes, consider the above a reminder.

A Short Sale is when the ‘bank’ (lender) agrees to take less than the amount actually owed by the ‘mortgagee’ (the home owner, the debtor). 

Now there are some disctinctions here you should know - A ‘Short Sale’ is not the same as ‘Buying the Note’ at a discount.  When you are going after the Short Sale, your intention is to either (1) Get the property to hold and rent or lease option, or (2) Do what is called a ‘Quick Turn’ of the property (sell it to a new family OR another investor who will be; rehabbing to sell retail, or renting out).  In other words you will be expecting to realize your profit sooner rather than later.

Discounting the Note, makes you the new ‘bank’.  We can talk in depth about this in another entry here but suffice it to say for now “as the bank” you get the payments over time making ‘allota’ money on your money invested in the note AND/OR continue the foreclosure if that is why you found the note to begin with.  (I promise, more later on this . . .).

If you are interested in learning more about short sales and shifting your focus to this niche specifically, contact Peggy in my office about our mentoring programs.  Our office hours are 10a - 5p Eastern Time and our phone is 770-338-2797.