Buying Notes are the Safest & Smartest Way to Invest in Real EstateNotes: Safe & Simple
This is Manny Gathers with Best Money Strategies. Why are Notes the safest and smartest way to invest in real estate? Let’s look at a real estate note transaction that ends up being a deed in lieu and REO sale. What that means is, a deed in lieu is when the homeowner, that’s unable to pay their mortgage for whatever reason, agrees to give the keys back to the property to the lender, or the bank, in exchange for being able to walk away without being financially destroyed by a foreclosure on their record.
So essentially they agree to return the keys, do not damage the property, walk away, and they don’t have this financial burden on their credit or anything going forward. The lender now has the property without a foreclosure battle and they can in turn take the property and get it back in the market, sold or rented. They have multiple options to choose from. So in this particular example, this property had a balance, unpaid balance, of $144,000 plus three years of back payments. The fair market value, or FMV, was $110,000. The lender wanted to get rid of this problem so they ended up getting the keys and the deed in lieu of foreclosure. But they didn’t want to do the work to get the house back on the market to be sold or rented, so they sold it to a company like mines, Best Money Strategies, at a discount. In this case, that’s about a 50% discount. $55,000 of the purchase price on a value of $110,000 without any additional repairs, as is value. And then we were able to take this property now as the new lender and sell it on the market as a REO sale, just like a bank would. And this particular property was sold in 60 days for $110,000. Then after closing costs and fees and all that good stuff, we made a profit of $99,000 and in this case if you were the private investor who put up the $55,000, you would in turn have gotten this deal with a 50/50 split which means you got your $55,000 back plus half of the $99,000. So essentially, another $50,000, or about a 50% return. All in under a 60 day timeline.
This is what we do for our private investors. We do all the heavy lifting. We handle the legal issues and hiring of the teams to do everything within compliance so that we don’t break any rules and consumer protection laws. Ultimately, helping the homeowner resolve their financial issues so they don’t have a devastating financial track record following them. They were able to walk away from this home with zero damage to their credit or anything like that. We were able to take the house back and put it back on the market and sell it to someone who really wanted this home. It’s a win, win. And the investor was able to get money without lifting a hammer or banging a nail or dealing with contractors in a relatively short timeframe. Awesome! It’s a win, win, win and this is one of the many strategies that we use when we buy and sell notes on behalf of our investors.
So give us a call, 410-855-5373, or email us at email@example.com, or visit our website, bestmoneystrategies.com
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