Charles J Mosely Jr on Real Estate
Some People Consider Real Estate Investing Similar to Buying a Boat
When you get right down to it, buying a non-performing mortgage is like buying a boat; the two happiest days are the day you buy it, and the day you sell it! Investing in a non-performing mortgage note (NPN-NPL), and cashing out for a profit, are my two happiest days as a note investor. A non-performing note is basically a mortgage where the borrower has stopped paying which means you can buy it at a discount.
You have heard the old saying in real estate, the profit is made when you buy. How true that is, especially in the note world! We have found that you have to take into account all the costs you will run into from the day you buy it, until the day you sell it, and use that to make sure you are not overpaying. If not, you can lose money; sometimes a lot, sometimes all of it.
While there are some warm and fuzzy feelings experienced when you own the boat, like taking it out on the water for the first time, you are going to have a lot of ongoing costs. If you store it in the water, there are dock fees, maintenance fees, insurance, and if you financed it, monthly payments. If you store it at home or a parking facility, you will have to protect it from the elements, possibly pay rent, and you could destroy it in an accident towing it to, or putting it in the water.
With NPN's, finally making contact with a homeowner who wants to stay, despite doing his best to be invisible is equally as thrilling. This usually leads to either attempting to work out a payment plan to get them repaying or settling for a lump sum to pay it off is a great feeling.
Otherwise, it's practically death by a thousand cuts.
Sometimes I feel like we are being nickeled & dimed to death by a plethora of service providers; lawyers, note servicers, document custodians, rehabbers, lawn cutters, property preservationists, appraisers, photographers, house cleaners, city agencies, code enforcement, county tax collectors, Realtors, health inspectors, zoning ordinances, Home Owners Associations, utilities, forest divisions, trash haulers, flood areas, etc., that all want to extract as money from you as possible every time they move or type something.
So the most important thing I do now is come up with as many costs as possible before we make an offer to buy a note, so we can factor that into our purchase price. One of the biggest we have found in working out over fifty notes is the expenses are usually higher, and it takes longer to exit in judicial foreclosure states. And now that we know something about rehabbing real estate, we have been equating possible home repair costs into our note buying bids now, so we know if we can still make a profit, or suffer a potential loss.
Now is the time to factor in the old carpenter's phrase; "Measure Twice, Cut Once." With notes, you want to make sure you run the numbers inside and out before you commit to buying a note with "Calculate Twice, Buy Right.
Article Source: http://EzineArticles.com/10279732
Charles J Mosley is the founder of Echelon Music Group. He is a Commerical Real Estate Investor and Activist in Dallas, Texas.
Christopher Winkler is President of Silverwood Capital, LLC is a Texas based Real Estate investment firm specializing in buying heavily discounted residential and commercial distressed and toxic assets.
Article Source: http://EzineArticles.com/10279732
You are providing such an informative article here. You have described everything which is easily understandable to everyone. Keep sharing this kind of articles, Thank you.Homes For Sale North Bend OregonReplyDelete
You have done good work by publishing this article here. I found this article too much informative, and also it is beneficial to enhance our knowledge. Grateful to you for sharing an article like this. Gibsons Sold PropertiesReplyDelete
This comment has been removed by the author.ReplyDelete
I read the above article and I got some different kind of information from your article about a mattress. It is a helpful article to enhance our knowledge for us. Thankful to you for sharing an article like this.Port Alberni real estateReplyDelete
You have worked nicely with your insights that makes our work easy. The information you have provided is really factual and significant for us. Keep sharing these types of article, Thank you.Capilano house for saleReplyDelete
You wrote this post real estate in the Bronx very carefully. The amount of information is stunning and also a gainful article for us. Keep sharing this kind of articles, Thank you.ReplyDelete
Very good, This information is essential and informative which you have shared here. Read more info about section 8 houses for rent. It is beneficial for beginners to develop their knowledge. It is very gainful information. Thanks for share it.ReplyDelete
I read the above article and I got some different kind of information from your article about a mattress. It is a helpful article to enhance our knowledge for us. Thankful to you for sharing an article like this.Oshawa real estate agentReplyDelete