If you’re a real estate solutions company buying properties for cash, are you buying notes and deeds? You can add an arrow to your quiver by buying notes and deeds. They can be far more profitable and less stressful than stocks and real estate investment in physical property.
Since most people buy homes using mortgage financing, notes can be thought of as another name for mortgage agreements. After the home purchase closes, banks and other lenders usually sell them to government entities like Fannie Mae, Freddie Mac, and the Federal Housing Administration.
The housing market has improved since the bust but hasn’t healed fully. There were 296,458 U.S. properties with foreclosure filings in the first six months of 2019, down 18 percent from a year ago.
As the dust settles, government agencies sell delinquent notes to big institutional investors like Lone Star Funds, Goldman Sachs and Fortress Investments, as well as some community nonprofits, in bulk. The agencies have sold more than $28 billion in distressed loans since 2012, according to government data. The selling of delinquent notes and deeds presents an opportunity for knowledgable investors.
You can become the bank and service the notes and deeds yourself or hire a third-party servicing company that also deals with late pays.
The Deed – The Deed is a legal document that gives rights to something. In real estate, a Deed transfers title of ownership and gives the new owner the right to use the property.
The Note – The Note (or Promissory Note) is a contract where a party makes a promise to pay a sum of money to another party under specific terms. In real estate, the Note is the legal document that binds the borrower to repay a mortgage loan. This agreement will contain important loan specifications, such as the loan amount, interest rate, due dates, late charges, and the terms of the mortgage.
Hard money lenders, individual investors, and community banks can auction-off or sell-off mortgage notes (the notes can be current or in various states of default).
Individuals can bid on and purchase these notes and start receiving payments from the borrowers
A recent example: A note on an Atlanta-area home was being sold for $24,360; according to estimates from Zillow and local agents, its market value was between $50,000 and $70,000.
Some back taxes were owed, and a payment history showed that while the homeowner was making erratic or partial payments on her $500 monthly mortgage, she hadn’t quit. She had some equity built up in the house, another sign of commitment.
For more information on How to Buy and Sell Notes and Deeds, attend one of Paige Panzarello’s classes on Building Wealth with Notes Workshop. You can register for her next class, go online for training. or listen to these powerful podcasts.
We buy as-is. An investor will estimate the repairs needed to restore your property, arrive at an offer, and will purchase the property as-is.
When we buy houses fast, there are no fees! We don’t charge you a real estate commission, and we may take care of any other nagging financial problems such as back taxes, code violations, or past due water and sewer bills.
Paige also helps to educate people on the importance of Passive Income, deal evaluation, money management, how to wisely interact with money, and what the heck does a profit and loss and balance sheet actually look like?