Some people get into note investing and want to live on Easy Street. They dream of acquiring hundreds of notes, all of them performing and maturing to term with no hiccups or issues.
That’s not always the case.
In some cases you may have to foreclose or do a deed-in-lieu. Either way, you will get the property back and be the owner of an asset that may be in another state.
Don’t Panic
- So what do you do? The first thing is do not panic because you have access to resources.
At this point you do not need the servicer to help service this loan because you do not have a loan. So you can save a few dollars by canceling your servicer. - Be sure to shore-up your property by using a property service company. I use SGPnow.com. This company works Nationwide and can provide all the services you need from changing the locks or winterizing the property to boarding up the property and/or placing “for sale” signs on the lawn. This company does it all without you needing to leave your home or office.
- Decide on what exit strategy you want to deploy.
Exit Strategies
Of course there are hundreds of different exit strategies that can be deployed once you get a property back. Through the Pier Harbor Group Note Investing Training, we teach students how to evaluate various exit strategies before they even make offers on notes. That way they have some idea, should the note become non-performing or if it is already non-performing, whether the note will still be profitable. These are just a handful of exit strategies that will be expanded upon in other blogs:
- Sell the property: Connect with a realtor, put it on the market, sell it and collect the proceeds.
Sell property with a realtor and offer seller financing: Connect with a realtor, put it on the market and take back the loan or turn another note on your terms. - Sell property without a realtor and offer seller financing: Place a listing on Craigslist or FSBO.com and offer seller financing under your terms. This will require you to vet the borrower, use a mortgage loan originator to ensure compliance and find a title company to complete the transaction (this is another blog).
- Turn it into a rental property
- Use it as a short-term rental
Conclusion
Holding a portfolio of performing notes is great, but keep in mind that they can also go non-performing and you need to know what to do. By having ample resources and knowing your options, you are not caught off guard and can turn it into a profitable asset.
