3 Reasons Why Non Performing Notes Perform Better - REI Classroom with Scott Carson

Welcome back to the flipnerd.com REI classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now let's meet today's expert host.

Hey everybody. Scott Carson here. And I am today's guest host of the REI classroom. And today's subject is going to be the three reasons why non performing notes perform better for investors.

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All right everybody really excited about this topic. This is something that we focus on on a daily basis@weclose. Notes.com is non performing notes. And a lot of real estate investors and a lot of realtors. A lot of people looking to get into real estate investing always wonder about what's this big cool thing about non performing notes? Why are notes such a niche or a hot niche topic right now? And it's because literally these three reasons, first and foremost, inventory. Many real estate investors are doing the traditional things of going after the single borrower who's got one property, maybe two properties. Whether it's a probate or foreclosure or pre foreclosures or estate, whatever type of deal you're going after, you're targeting one borrower, one investor, me and the other note investors. We don't target one investor. We've actually flipped the whole done 180 degree turning on after the banks. And so literally there are still 7 million plus homes underwater out there that we are targeting. So instead of us going after one borrower, we're going after banks that have hundreds of assets for us to take a look at. And we're seeing these deals six to 12 months before traditional fix and flippers, traditional reo buyers, traditional people buying distressed assets from the homeowner. All right, that's the one of the biggest first topics, there's so much inventory. You had the 7 million existing homes, which is still down from the 15 million underwater homes in 2000. I'm sorry, 2009, when it was at the peak. We also have this huge wave of loan modifications that are starting to hit the market now. Another three to four million loan modifications that were before and five years ago that are now starting to adjust. So we are literally talking about, if you're a note investor, you have access to 10, potentially 10 million residential homes that you can cherry pick that are underwater where you are become the bank. Now that's the first thing. The second thing is pricing. The second reason why non performing notes perform better for investors is pricing. Most traditional real estate investors are used to pricing and offer it's 70% of ARV minus repairs or money costs. That's great. We don't ever pay 70 cents on the dollar for an asset. Okay, I take that back. We might pay occasionally if it's close to being reo. But we're going to be ahead of you guys who are out there looking at REOs anyway because we're buying direct from the banks. Usually we're buying somewhere with a 30, 40, 50, 60, 70, some cases 80% discount off of fair market value. Why is that? Well, we are becoming the bank. We are taking over. Literally. We are killing the Freddy Krueger that is killing the banks. All right, the banks don't like to deal with distressed debt. It's not what they're set up for. They want to deal with performing debt. And they will incentivize us as note investors to take over their nightmares, which gives us a lot of opportunity at the huge discounted price to turn the bank's nightmare into a beautiful dream. Cash cow. Money making. Hang on. Money making profit for us as investors. All right, now the third strategy is exit strategies. There are so many different exit strategies as note investors. Whether you're wholesaling the notes like a traditional wholesaler to other note investors. You can literally try to get the borrower to reinstate the property and try to get them to modify. You can let them do a loan assumption, you can approve a short sale, you can go ahead and foreclose, do cash or keys deed maloo, get a payoff, one assumption or foreclose if you need to. There's literally about nine different exit strategies that you have available to you as a note investor. Now, most traditional real estate investors will have one, maybe two routes as exit strategy A to either repair the property and keep it as a rental or b turn around and sell it as an reo. And that's great, but I would rather pay less for the asset, have a bigger pool to buy in, and have multiple exit strategies that are going to put a lot of money in my pocket. And that's your lesson for today in the REI classroom. Everybody. Scott Carson we close notes. Check it out. That's the three Reasons why Non Performing notes Perform Better for Real Estate Investors.

If you're an active real estate investor already doing deals and looking to double or triple your business, you should consider joining the Investor Fuel Real Estate Investor Mastermind. We're a small group of investors that share our best practices, tips and tricks with one another in effort to all win. Real estate investing can be a lonely business for successful real estate investors, but it doesn't have to be. Investor fuel members meet four times a year, but we talk to each other 365 days a year and we focus on improving the profitability of our businesses, improving the quality of our lives. That's why we do this right and making an impact on those around us so we can truly leave a legacy. We limit our membership to only one to two members per market, so so everyone shares their knowledge, tips and tricks openly and honestly. Our members include some buying one to two houses a month, up to some of the most respected investors and leaders in the real estate investing industry, some of which have personally done over a thousand deals. If you'd like to be considered for our invitation only World Class Mastermind, please visit investorfuel.com to request your personal invitation. Our next meeting is coming up quickly. Go to investorfuel.com now to learn more. Please note the views and opinions expressed by the individuals in this program do not necessarily reflect those of flipnerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions as real estate investing can be risky. Are you a member yet of flipnerd.com, the hottest real estate investing social community online? If not, you can join for free in less than 30 seconds and get access to hundreds of off market deals vendors in your market to help you in your business and you can start networking with thousands of other investors just like you get your free account now@flipnerd.com Please check out the Flipnerd family of real estate investing shows where you can access hundreds of expert interviews, quick tips and lessons from leaders across the real estate investing industry. Best they're available@flipnerd.com shows or simply search for Flipnerd in the itunes store.