I always hear this term, “Buy the Block”. Typically, it refers to real estate investors who buy entire city blocks of cheap real estate and flip it into luxury apartments, condos, etc. I grew up in NYC and I can remember back in the late seventies and early eighties, there were
Brownstone buildings going for a dollar. A single dollar!
Granted, they were shells and needed full gut rehabs done on them, but the city could not give them away. Well, some smart investor(s) bought them and gradually started renovating them, the area started gentrifying, more and more people started moving in and even more got priced out. Those same Brownstones, less than twenty years after that time sold for millions! Today, they are still astronomically in the high millions.
Man, what a little time and buying at a deep discount can do for you… I have spoken about buying mortgage notes and how they can be purchased at a deep discount as well. Especially the non-performing notes. You might not be able to buy a city block all at one time, but you can purchase enough notes over time to make up a city block! Some big note investors have enough notes to create a whole city!
So, let us revisit for second what a non-performing note is. Non-performing notes occur when a borrower is delinquent on their mortgage payments. When banks, hedge funds or other note sellers want to sell them, they will sell them at a discount. Other factors come into play such as condition of the asset, location, back taxes, foreclosure, etc. However, the more of a delinquency and deteriorated condition of the asset, the more of a discount you can get the note for, most times. Location is probably one of the bigger factors here. Think big city, warm climate, rural, urban, etc.
Why would anyone want a note that is delinquent, in foreclosure or in poor condition? Well, with an unoccupied asset, many investors will look to do rehabs on the property and rent it out or offer seller financing to someone who might not otherwise be able to get traditional bank financing. Some investors avoid a less than desirable neighborhood, but those may be the very places that you can help the most and provide affordable housing.
Not just that, remember, if you are using your SDIRA or other retirement account, the profits and cashflow you receive will go on for as long as you have a paying borrower and own the note!
Unfortunately, we are still in this COVID environment, but as always, stay safe out there.
For more information on notes or if you have notes to sell, reach out to Zee at Awanna Holdings, LLC (571)659-5005. ©Awanna Holdings, LLC (Aug 2020-20), zee@awannarandh.com www.awannarandh.com