Buying Defaulted Mortgages – Don’t Focus On One Exit Strategy
During a conversation the other day, a new Note Buyer told me that he decided to start investing in buying defaulted mortgages. He had been wholesaling properties for a very long time prior to this.
The thing that worried me was when he made the following statement. He told me that the reason why he was getting into the business of buying defaulted mortgages was not only for some good cash flow, but also to keep people in their houses.
Don’t get me wrong. I’ll be the first to admit that Humanity counts. But…
Make sure you are looking at the bigger picture.
When Buying Defaulted Mortgages, Don’t Only Focus On One Exit Strategy
It will not work.
A SINGLE exit strategy for the defaulted mortgages that you buy may be what you want to pursue. (in this example he was looking to hold all the notes as cash flow by modifying them and getting them to re-perform).
How To Buy Defaulted Mortgages: Multiple Exit Strategies Are Needed
You have to be like Rafael Nadal in order to invest successfully in defaulted mortgages.
Nadal can do it all. He has a great serve, an awesome forehand, and can play an excellent game on both the grass and clay court.
You should have the same approach when you are buying defaulted mortgages. Have the ability to pursue multiple exit strategies at once in your note buying business.
Don’t get stuck with just one note buying strategy.
Using Foreclosure as a Buying Defaulted Mortgages Tool
When trying to modify a loan, sometimes the only way to get a borrower to cooperate with you is to start the foreclosure action.
Why?
Sometimes people need a wake up call, like a foreclosure notice to get them to take control of their situation. If they have been missing payments on a regular basis with no real threat, why take action? The notice combined with your help to modify their loan may be just what they need.
Don’t be like the investor I talked to. Don’t fall into that trap.
Don’t think that 1 Exit Strategy to your Defaulted Mortgage Buying business is enough to make you successful.
To do well in the note buying business, know all of your 5 Exit Strategies.