INVESTING IN MORTGAGE NOTES
BET YOU DIDN'T KNOW YOU COULD
BUY THE MORTGAGE
I purchased the second mortgage on this house in Grand Rapids Michigan for only $2,700. The remaining balance on the mortgage was $27, 879. The homeowner was 4 years behind in payments... But! He was CURRENT on the first mortgage.
It would've cost him $15k to bring this delinquent loan current. I allowed him to reinstate it for only $7k (I added the remaining $8k to the back end of the loan) and then I made his monthly payment $385 for the next 15 years.
The Math: I spent $2,700 for the mortgage. Then got 3 times my money back immediately and I'm now collecting $385/month for the next 15 years on the remaining balance of $35,879....not too bad!
That's how I invest in real estate and cash-flow long term WITHOUT having to deal with the property or a tenant.
BUYING THE MORTGAGE
Regular people, like you and I, can buy the mortgage loan. When you purchase a mortgage note from a bank, lender or hedge-fund, you are buying the DEBT not the property. The homeowner receives a letter informing them that their loan has been transferred to YOUR company and they begin making their monthly mortgage payments to YOU. Essentially, you become the bank. This creates an ongoing monthly cashflow for you and your family for years until the loan is paid in full.
There's no licensing, educational or credit requirements for this type of investing. Additionally, there's no board certifications or exams to take. You don't have to re-up any membership. You don't even have to take out a loan to buy mortgage notes. Many people leverage their income from their regular job to purchase their first mortgage notes.
Mortgage note investing creates a passive form of income. Unlike more traditional real estate investments, like fixing/flipping property and owning rental property, it often requires very minimal time or expense. Mortgage note investing can be done on your own time, from your own home, allowing you to live anywhere in the world. There's a little work up front, but after that it's blissfully passive. Unlike owning rental property, note investing does not require you to maintain property; the homeowner continues to take care of their own property. The bank (you) never visits the home!
FREQUENTLY ASKED QUESTIONS:
- What exactly is mortgage note investing?
As a note investor, you purchase mortgage notes from banks, hedge-funds, lenders and other individual investors. The lender selling the mortgage sends a letter to the homeowner informing them that their loan has been transferred/sold to YOUR company and the date that they should begin sending their payments to you. This creates an on-going, passive cashflow. This can be done with virtually any type of debt, however, debt secured by real estate is one of the most secure forms of debt that you can buy.
- What qualifications do I need to have?
There's no certifications, exams, credit requirements or coursework to complete. We recommend that you board your loans with a licensed mortgage servicer. Most investors don't need to take out a loan because the assets are so affordable. You really just need to receive training on what to do and mentorship as you go through the process of learning. The note business is one in which you learn by DOING; which is why we offer mentorship with our workshops.
- How much do mortgage notes usually cost? How much would I need purchase a note?
Mortgage notes are available at all price points, however the more desirable the asset and the higher the remaining balance on the loan, the higher the cost of the mortgage note. Many second mortgages in this asset class can be purchased in the $2,000 - $8,000 price range and this is the range that we focus on primarily in the workshop. However, students may choose to purchase other types of loans such as commercial loans or first (senior lien) mortgages or non-delinquent (performing/current) mortgages which may be more expensive.
- What types are mortgages are available at such a low cost?
Our business model is to purchase delinquent, second mortgages secured the borrowers primary residence. The first mortgage on that property MUST be current. We focus on this asset class because the homes tend to be more attractive and the remaining balance on the loan is smaller which makes these loans affordable for most investors.
- What ROI can I expect from this type of investment?
In this asset class it's not unusual to receive a double-digit internal rate of return. As with any investment there's risk; however, in the mortgage note space much of your risk assessment is done PRIOR TO purchasing the mortgage note. Therefore you're able to effectively identify and manage your risk on the front end so you have much more control over the outcome of your investment.
- What if the homeowner doesn't pay my mortgage?
If the homeowner refuses to pay their mortgage, you can foreclose and take over the property. There are other options available as well.
- What do I need to do to get started?
Take our FREE course! This will give you a great overview of this asset-class and it's potential. Click on the FREE Course tab above.
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