Another benefit to investing in mortgage notes is that it can actually be a good way to acquire more real estate. If you're focusing your efforts on buying non performing mortgage notes, so these are mortgages where the borrowers have stopped paying, by buying that note, At a really big discount from the bank or whatever, whoever owns the note, you can buy it at a big discount and then go ahead and foreclose on the borrower.
Who's either left the property and walked away from it or maybe the owners of the property have passed away and so no one's there and no one's making the payments. No one's living in the property or maybe there's people that know they can't afford to make their payments so they've stopped doing it, but now they're just going to stay in the property until.
Someone tells them to leave. In any case, if you buy those kinds of non performing mortgage notes and you buy them at the right price, you can then take your legal right as the note holder or lender and foreclose on that borrower and foreclose on that note, and then take the property back. Now suddenly, for the price that you paid for that note, plus some attorney costs and things like that, you can actually acquire a property in your own name.
That you had no competition with other investors over and do with it as you want. So you can fix it up, clean it out, and then rent it out and keep it as a rental property. You can do a full remodel on it and then sell it at top market value. You could just hire a realtor and sell it as is. Uh, it's a process I call whole tailing, which is awesome.
It's one of my favorite strategies. Um, you could move into it. You could keep it as an Airbnb or a short, short term vacation rental. Or you could even create a new note by selling the property with owner financing, collecting a down payment from a new buyer borrower. And then creating a note for them to pay you back over time.
So you have a brand new note. So there's so many things you can do once you've taken the property back through foreclosure. Another strategy you can do instead of foreclosing on the borrower is if you can negotiate a cash for keys scenario where you tell the borrower, say, look, you haven't made a payment for 12 months, let's say.
This is obviously not working for you and I don't want to have to foreclose on you. Wreck your credit score for the next seven years. Why don't we just negotiate something where I'll pay you some money to walk away and vacate the property in exchange You deed the property back to me and this is called what it's called a deed in lieu of foreclosure And this is a great way to acquire properties get them back from the borrowers when you buy the note And they don't have to go through the Foreclosure process.
In some states that can take a whole year to foreclose, so you can skip that whole thing. The, the, uh, borrower gets to leave the property, get a little bit of money to move out, and then they save their credit and everyone wins. So that's another way either foreclosing or a deeded in lieu of foreclosure. But if you pursue non-performing notes, it could be a great way to get properties to hold his rentals or fix and flip or do it whatever you want.
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