There are many ways to make money in real estate, but perhaps one of the less well known ways is investing in distressed mortgages, also known as real estate “notes”. These are delinquent loans where the borrower has stopped making payments and the property is in some stage of the foreclosure process. In some states this can take years owing to the backlog caused by the foreclosure crisis which began in 2008. Working with the individual borrowers to modify their loans is time consuming process that banks aren’t set up to do. Instead the banks are willing to sell large portfolios of these mortgages at deep discounts to specialty companies who raise money from investors to buy the notes, and attempt to get them reperforming. When done properly, it’s a rare win-win-win situation where a homeowner gets a new affordable payment, the note company gets a profitable asset, and investors can get a high return on their money.
Dave Van Horn is president of PPR Note Company which stands for partners for payment relief. He is going to give us an inside view of the distressed mortgage note business, and how you can invest in one of his funds to get that high yield we all want. Enjoy!