Buying A Real Estate Note Is Like Buying A Boat

 When you get down to it, buying a non-performing property is like buying a boat; the two happiest days are the day you buy it and the day you sell it! Investing in non-performing bonds (NPN-NPL) and paying out for profit are my two happiest days as a bond investor.

You've heard the old saying in real estate, profit is made when you buy. How true, especially in the world of sheet music! We've found that you need to consider all the costs you incur from the day you buy to the day you sell and use that to make sure you don't overpay.While there are some warm and fuzzy feelings when you own a boat, like when you first take it out on the water, you will have a lot of running costs. If you store it in water, there are port fees, maintenance fees, insurance and if you financed it, monthly payments. If you store it at home or in a parking lot, you'll need to protect it from the elements, possibly pay rent, and in the event of an accident, you could destroy it by towing or submerging it in water.

With NPN, finally making contact with a homeowner who wants to stay despite doing everything to be invisible is just as exciting. This usually leads to either trying to work out a payment plan to pay them off, or settling for a lump sum to pay off feels great.Sometimes I feel as if we are being nickel-plated and silenced to death by the multitude of service providers; attorneys, note managers, document managers, rehab workers, lawn mowers, property conservationists, appraisers, photographers, house cleaners, city agencies, law enforcement, county tax collectors, real estate agents, health inspectors, zoning ordinances, home owner associations, utilities , forest division, trash haulers, floodplains, etc. who want to get as much money out of you every time they move something or write something.

So the most important thing I'm doing now is to come up with as many costs as possible before we make an offer to buy the note so we can factor that into our purchase price. One of the biggest we've found when processing over fifty notes is the cost, which is usually higher and takes longer to issue in foreclosure states.