How to Make Money Investing in Nonperforming Notes

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Hello again!



Our class attendees and members of WCN always ask what the easiest, most inexpensive way to make money buying and selling nonperforming notes is. Consistently, we advise them to make 10 new bank phone calls a day, totaling 50 a week. Out of 5 hours of calls a week, they should conservatively get 1 tape (spreadsheet) of nonperforming notes that the bank will sell. With that list, they can make money without even buying any of the notes themselves, and we give 50% of net profit to them for the purchase of notes by ourselves or any other members we have nationwide.





I wanted to give you an idea of two typical deals that we are getting ready to close on with two joint venture partners who are funding these two deals for us and we are splitting profits with them at on 50/50 ratio.

The first deal is a four plex in Visalia, CA that we are buying directly from Capital One. The unpaid balance on the note is just over $200,000. Current comps put the property value at $135,000. We are buying the note at $85,000. We will be getting the property turned over to us via deed in lieu from the property owner and we will be selling the property quickly at around $110,000. This property is fully leased up and rents are coming in at $2,000 per month, which is generating over a 28% return currently until we sell the property (which will be our own REO).
The other deal we are currently working on is 39 individual condos that are being operated as an apartment complex in Houston. We have the note under contract with Regions bank at $600,000 and the income value of the property is at $1,100,000. We currently are marketing the property for a quick sale of $750,000, which will generate us a nice profit along with leaving plenty of profit on the back end for a buyer. We expect to flip this note in 90 days and generate an annualized return of around 100% (not including rental cash flow).




Comments(1)

  • cyndyB3rd June, 2013

    Great Post Amber. What deals do are you currently working on?

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