Let me count the ways. There are so many ways to exit a note other than just selling it, this is the most common way, however. This is another one of those great things about notes! I’m sure there are a ton of other ways I haven’t discovered yet, but let’s just cover a few of these basic ways.
One of the most common ways investors exit a note is to just sell it.
If it has some seasoning (payments made over a period) and it’s performing, an investor may be able to gain at least 85% to 90% of the unpaid balance on a sale. Lately, I hear some are selling for more than that. That’s a topic for another time. If it’s non-performing, it can be sold at a much deeper discount, as little as 30% or 40% in some instances.
A note can be wholesaled too! Sort of like an actual property, except, your wholesaling the note.
I can buy a note and take ownership of it for one price and sell the note to another investor before I even close on it. Some would also call this brokering the note. Some investors say you may have to have a license to wholesale or broker notes, so be cautious of this method and consult with your attorney.
Typically, investors try to help a borrower stay in the home by working out monthly payments with them. Sometimes, that doesn’t work, and the property must be foreclosed on. A foreclosure is one of a couple of methods in notes where you will have actual possession of the property once the foreclosure is complete.
If you have possession of the property after foreclosure, you can do multiple things with the property at that point. The property can be listed as an REO and sold as-is to wholesalers, rehabbed and sold to retail buyers, rehabbed and rented out for cash flow or sold to turnkey investors, seller financed for cash flow, etc. So many ways to exit stage left!
Don’t shy away from non-performing notes that can’t be brought back to performing, there are so many ways to create exits and still not only make your capital back but create cash flow for the long term too!
©Awanna Renovation & Holdings, LLC (Dec 2019-4), email@example.com/www.awannarandh.com