Why are notes a great investment? Let's discuss some reasons below:
They are not like a typical rental - No need to deal with tenants, toilets, trash, repairs. We deal with borrowers, not tenants. The only time a note investor needs to deal with the property is when the foreclosure exit strategy is used. The house at that point is an REO - real estate owned - and belongs to the bank, in this case the note investor.
Due diligence is easy to outsource - We acquire notes that have been filtered down from a large list. How do we do that? We use a virtual assistant that helps use complete the preliminary due diligence on a tape. A tape is an Excel spreadsheet of notes.
Expertise - We work with a team of professionals such as foreclosure attorneys, title experts, and credit counselors. We trust them to help us make the right decisions and guide us along the investment process. Each turn they can save an investment or help us avoid a bad investment altogether.
Multiple exit strategies - There are so many exit strategies in note investing. Loan modification, deed in-lieu of foreclosure, cash for keys, short sale, or sale of the foreclosed property. Foreclosure is the last resort exit strategy and happens when the homeowners truly cannot afford their home.