Foreclosing on a non-performing note can be expensive and time-consuming.
The loan is secured by real estate, providing a safety net if the borrower stops paying. Types of Notes
First position notes are paid first in a foreclosure, while "second" or junior notes are riskier but often cheaper. Key Benefits buying discounted notes
Borrowers are making regular payments. These offer lower risk and steady, immediate cash flow.
Borrowers have stopped paying. These are bought at much steeper discounts, often with the goal of restructuring the loan or foreclosing to take the property. Foreclosing on a non-performing note can be expensive
💡 Unlike being a landlord, there are no "tenants, toilets, or termites" to manage.💰 Higher Yields: Buying at a discount creates an automatic gain in equity and a higher ROI than traditional bonds.🛡️ Asset Security: Your investment is backed by a physical asset that can be liquidated if necessary. Risks to Watch For
Buying discounted notes allows you to act as the "bank" by purchasing existing mortgage debt at a price below its face value. This strategy can provide high-yield passive income or a path to acquiring property through foreclosure. How It Works Key Benefits Borrowers are making regular payments
AI responses may include mistakes. For financial advice, consult a professional. Learn more Should You Only Buy First Position Notes? - BiggerPockets
