When you get right down to it, investing in a non-performing real estate investment note is like investing in a boat; the 2 happiest days are definitely the day you acquire it, and also the day you flip it! Investing in a non-performing note (NPN-NPL), and cashing out for any profit, are my two happiest days like a note investor.
You often hear the old saying in real estate property, the money is made when you get. How factual that is, specially in the note world! We have found out that you have to bear in mind all the costs you’ll run into in the day you purchase it, prior to the day you sell, and employ that to ensure that you are not overpaying. If not, you may lose money; sometimes a lot, sometimes everything.
While there are several warm and fuzzy feelings experienced whenever you own the boat, like taking against eachother on the water initially, you’re going to have a large amount of ongoing costs. If you store it in water, you will discover dock fees, maintenance fees, insurance, and when you financed it, monthly obligations. If you store it fitness center a parking facility, you are going to have to protect it from your elements, possibly pay rent, so you could destroy it inside an accident towing it to, or putting it in water.
With NPN’s, finally making contact which has a homeowner who wishes to stay, despite doing his far better to be invisible is as thrilling. This usually contributes to either trying to work out a repayment schedule to get them repaying, or settling for just a lump sum to cover it off is a wonderful feeling.
Otherwise, it’s practically death by way of a thousand cuts.
Sometimes I feel like we’re also being nickeled & dimed to death using a plethora of service providers; lawyers, note servicers, document custodians, rehabbers, lawn cutters, property preservationists, appraisers, photographers, house cleaners, city agencies, code enforcement, county tax collectors, Realtors, health inspectors, zoning ordinances, Home Owners Associations, utilities, forest divisions, trash haulers, flood areas, etc., that want to extract as money of your stuff as possible should they move or type something.
So what’s important I do now could be come up with several costs as is possible before we make a deal to buy a communication, and we all can ingredient that into our sticker price. One of the biggest we’ve got found in training over fifty notes could be the expenses tend to be higher, also it takes longer to exit in judicial foreclosure states. And now that we understand something about rehabbing real estate property, we’ve been equating possible home repair costs into our note buying bids now, and we know if we could still generate income, or suffer a possible loss.
Now could be the time to consider the old carpenter’s phrase; “Measure Twice, Cut Once.” With notes, you want to successfully run the numbers in and out before you commit to purchasing a note with “Calculate Twice, Buy Right.”