Warning, Will Robinson! Warning! You may have to read this, and the next few, blogs several times to get the full gist of things. After I wrote it, I realized just how much information I’ve packed into it, with each progressive technique getting a little more difficult.
So…the way to read this is akin to the same way you would eat an elephant: Slowly, and One Bite at a Time! [[Editor’s Note: Don’t let her scare you – like me, I think that the more you get into this chapter, the more excited you’ll get! Especially when you come to the last technique!]]
This is where these blogs on defaulted paper really begin to be FUN because…they’re all about the various ways you can make money!!
Your job is to merely match the technique with the deal.
I know, you’re probably thinking that I should be walking around with a calculator and a pocket-protector (no offense intended to my readers whose daily uniform consists of these items!), but the reality is that when it comes to making substantial profits in paper, I just plain get excited. You can’t deny a gal her fun, can you?!
You’ll remember from a former blog that we can look at paper from two different angles: we can either represent someone else in the transaction and make the standard 3-5% for our fee, or…we can courageously take the risk and control the paper for ourselves, resulting in profits that are 20% or greater!
I’m pretty sure that you are one of the latter, but before we go on, we need to make sure (as we say here in Texas), that we are all “singin’ off the same page in the hymnal.” In other words, let’s set some parameters:
It will be a lot easier for us if we take a master deal, and use its numbers throughout the six different methods, so that you can easily compare them. Keep these numbers in mind:
- $150,000 Value of the Property – no repairs needed (A.R.V.)
- $120,000 Present Value (PV) or Current Balance of the Defaulted Note
- $ 84,000 Price you pay for the note (you paid 70 cents on the dollar)…
- $ 7,200 Amount that the payors are in arrears ($1200 X 6 months)
And, so you know where we’re headed, here are the six ways. While the first method is a hybrid of what you’ve already learned, the second two methods involve having the current owner leave the property (which we highly recommend).
The last three involve keeping the seller in the property. I’ll let you decide which is best for you!
Anyway, you can buy the note with the intent to:
- Option the Note
- Get the Deed, in which case you could:
*Refinance in your name, then lease/option
*Sell the Property
- Foreclose, in which case you could:
*Refinance in your name, then lease
*Sell the Property
- Work w/ Payor to bring note current, and then Refinance
- Work w/ Payor to bring note current, and then Sell Note
- Work w/ Payor to bring note current, then Use It For Trade
I won’t keep you hanging, but in the interest of brevity, you’ll need to read the next blog in this series.
