When it comes to cash flow I never thought about buying non-performing mortgage notes for sale. Actually, I didn’t even know such a thing existed. But when I came in contact with my guest tor this episode – Scott Carson – I was eager to learn how he runs a very profitable business buying mortgage notes.
If you’ve never heard of buying mortgage notes, here’s the summary: It’s buying the paper loan that a homeowner has agreed to pay so that YOU become the bank. Imagine that, receiving mortgage payments FROM someone every month. This episode highlights how you can get into the mortgage note business yourself – including information about how you can be part of a free workshop that will fill you in on all the details. Take the time to listen.
Video Version of the Podcast
Outline of This Episode
- [1:05] Scott Carson, CEO of We Close Notes and his approach to real estate investing
- [5:20] How Scott’s company helps when bad things happen to good people
- [7:25] The process of getting into note investing and the ROI you can expect
- [14:05] What is required in terms of due diligence to do note investing wisely?
- [20:13] It sounds intimidating to get into this kind of investment. Is it?
- [24:00] Resources to get more information on note buying
Resources & People Mentioned
Connect with Scott Carson
Get into Scott’s workshop for free by emailing Scott (at) WeCloseNotes.com and tell him Casey Stubbs sent you
Everyone is in the payment game but on the wrong side of the payment stream
Anyone who has a mortgage on their home understands how the process works – for the most part. A bank or loan company lends you the money to purchase your home and you agree to the specified payment amounts and make the payments every month.
What most people don’t realize is that the bank simply owns the paper that says you have to pay them each month – that’s the mortgage note itself. The bank is not responsible for the upkeep of the home, keeping the utilities connected, or paying the property taxes. All of that is YOUR job.
Must be nice to the the bank, right? Just collecting money because you hold a piece of paper! The good news is that you CAN be the bank, very literally. You just have to know how to safely buy mortgage notes for sale at lending institutions across the nation. Listen to find out how it works.
Bad financial situations happen to good people. What if they can’t pay their mortgage?
We’ve all had our financial struggles. Some worse than others. In this episode, I share one of my difficult times after being laid off from my construction job. It was situations like that which encouraged me to find other ways to generate cash flow.
If a person who is otherwise responsible falls into that kind of situation, wouldn’t it be nice if the banks would work with them to help them stay in their homes? The reason they don’t is that, during the foreclosure process, a low-level person at the bank is following a documented process and has no authority to make exceptions – for anyone.
But if you buy mortgage notes for sale at banks, you can change that for honest people who are in a true state of need. You can work with them so they can stay in their homes and do it in a way that allows you to make a profit as well. How is it possible? Scott Carson explains on this episode.
Lending institutions all across the nation have bad debt to sell
It might surprise you that mortgage notes are for sale in the first place. How does it happen? It’s called “bad debt” – meaning the person who agreed to pay the loan isn’t paying it. Banks only allow that to go on for about 6 months before they start legal proceedings to get their money back from the borrower. We all know what that means – foreclosure.
The way the bank deals with foreclosure is not always to push the process to the very end. It’s expensive to do and the bank would much rather let someone else absorb that expense, so they sell their bad debt to willing buyers at a discounted price. It enables them to get the bad debt off their books and focus their energies on other, more lucrative things.
If you’re willing to capitalize on those situations you could buy non-performing mortgage notes for 30% to 40% of their original value. And you don’t always have to go to the expense of pursuing foreclosure. You have to know which banks to contact, how to talk to them, and how to ensure you’re not getting yourself into financial trouble by buying the note. Scott Carson explains the process, on this episode of Cashflow Hacking.
If you buy a non-performing mortgage note, how do you make money on it?
It definitely sounds counterintuitive to buy a mortgage note when the borrower is not paying. Why would you do it? Two reasons:
1) You can get it for a deep discount, and
2) As the note holder you have the right to renegotiate the terms of the loan in a way that makes it into a performing note.
Think about this scenario: A person agreed to a mortgage of $120,000 and a payment of $850/mo – but lost their job after closing on the loan. They haven’t made a payment for 7 months. The bank that holds the note decides to sell it for a deep discount – $48,000. You purchase the loan and now have the right to go back to that person and renegotiate the loan. If you wanted to, you could make it a mortgage of $48,000 total (the amount you paid) and take the borrower’s reduced payment month after month. But there are other ways to make the loan profitable. Find out what they are, on this episode.
Connect With Casey
- Website: https://caseystubbs.com
- Subscribe! https://www.youtube.com/caseystubbs
- Twitter: https://www.twitter.com/caseystubbs
- Facebook: https://www.facebook.com/caseystubbs
- LinkedIn: https://linkedin.com/in/caseystubbs