The Note Business
Hello All,
I am into houses not notes,so I do not have a clue about the buying and selling of notes. Can someone explain in detail why people buy and sell notes? Who buys them typically? And any other details that would be relavent.
Thank you,
Jesse
I buy notes!
I buy them because I can buy $10,000 interest in a property for $1000 to $5000 dollars. Typically, I buy seconds when the first is in foreclosure and the second will lose it's interest in the property. I have purchased thirds, and even fourths!
I contact the mortgage companies and let them know that I will take their "bad debt" off of their hands. This comes in handy at the end of their fiscal year when they to show more profit than loss. If I buy a note from them (even at a discount), it turns from a loss into a profit for their books.
Of course, I only buy notes on homes that have equity!
Either the person will pay off the note OR they won't. If they don't pay off the note, then I foreclose and either get the original amount of the note (the $10,000) or the house.
I doubt I'll ever sell a note because I'll never get full value.
It really quite simple.
Hope This Helps!
Mrs. Meltzer
Thank you Mrs. M. That still doesn't tell me why there is a large market for selling notes, and why there are guys on every TV station teaching people to go out there and find these things. Please explain?
People's plans change. When they want a new car, they may sell thier $20K for 10years note, for Cash now. Discount is negotiable.
You can also use a note you bought at a discount, to purchase property. Usually get full face value with a motovated seller.
Is this an easy part of the REI business to learn? Where would I get the best information? Thank you all for your help.
Jesse
Hi Jesse,
As you know, no part of REI is "easy", but the paper biz can be a very/equally profitable if you acquire the knowledge and skills needed to be successful - just like any other area of REI.
Contact me (look under my profile), and I will show you some creative ways to find notes, how to buy and sell them, and how to use them to increase your REI biz.
Talk to you soon,
James
People buy notes for one simple reason: to increase their cashflow or to profit from selling/foreclosing the note in the future.
Mortgage notes, also called Class-A paper, are a good income source if you're buying the right kind.
If you don't have any money now to invest in notes yourself then you can be a broker for a note investor - typically an institution such as Metropolitan, or a private investor.
All that hype you see on tv is, ALL HYPE. The notes business is just like any type of business: you have to work hard to achieve your goal.
Contact me if you have further questions about note investing.
Best regards.
POGIDAW