Everyone has a reason or a “why” as to why they invest. Whether it’s spending more time with family, traveling, or volunteering, we invest with a purpose. Yes, of course it is also about the money, but when you become a mortgage note investor, you also have the power to make a positive difference in someone else’s life.
The Difference Maker
I found out the power of note investing with an asset in Illinois. It was a piece of trash house that made “ugly” houses look pretty. I purchased the lease option and the borrowers were paying regularly…until. They decided to vacate the property and not exercise the option to buy. Now I was the official owner of an ugly house.
I had purchased the note for $21K and received six months of payments that totaled over $2,000 before the borrowers vacated. The first thing I tried to do was work through realtors to put the house on the market, but they were low-balling the listing price at $18K. Two realtors told me I wouldn’t get any more than that for the property, so I decided to list it myself on Craigslist because I wasn’t losing money on this deal.
I posted it on Craigslist as a “handyman special” for $28K and offered seller financing. It stayed on Craigslist for a month and a half with nothing more than a few tire-kickers.
Then I received a call.
A young man reached out and said he wanted to buy the house. I provided him access and he walked through and then called back and said he loved it. He was a self-proclaimed MacGyver and said he can fix anything. He told me he used to be on drugs, but has been clean for several years and he is trying to get his life together. He is currently renting an apartment in a bad neighborhood with a landlord who was trying to convert him to a cult. He wanted to move and ultimately become a homeowner.
Of course, I performed a background check, and honestly, he told me more about his background than what the background check revealed. I looked into his finances and found that he had steady income and I ran a credit check that revealed he had no credit and a credit score in 500 range. I decided to take a chance on him and sold the house for $28K with seller financing. Because he was a high risk, the interest rate reflected that at 9% with a monthly payment of $335 for a 10-year term.
Took A Chance & It Paid Off
It has been one year and this borrower has not missed one payment. The best part is that he is remodeling the home. It is no longer an “ugly” house, but one of the better-looking homes in the neighborhood, which increased the property value. He has called multiple times to thank me for giving him a chance.
Conclusion
That’s the benefit of being the individual bank. This person would not have been able to get a loan from a traditional bank. His credit and background didn’t fit the traditional borrower. But as the individual bank, we provide the American dream of home ownership for those who don’t fit the mold of traditional borrowers. That’s what being a mortgage note investor is truly about…making a difference.
