Buying Discounted Notes -
π‘ Unlike being a landlord, there are no "tenants, toilets, or termites" to manage.π° Higher Yields: Buying at a discount creates an automatic gain in equity and a higher ROI than traditional bonds.π‘οΈ Asset Security: Your investment is backed by a physical asset that can be liquidated if necessary. Risks to Watch For
Borrowers have stopped paying. These are bought at much steeper discounts, often with the goal of restructuring the loan or foreclosing to take the property. buying discounted notes
Foreclosing on a non-performing note can be expensive and time-consuming. π‘ Unlike being a landlord, there are no
You buy a note with a $100,000 balance for $70,000. Foreclosing on a non-performing note can be expensive
You collect interest on the full $100,000 balance, significantly increasing your effective yield.
When a lender (like a bank or private seller) wants to free up cash, they may sell their mortgage notes at a discount.