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Today’s NPN Marketplace

The non-performing notes sector has been booming after the market went into debt due to the recession in 2008 and 2009. Now, the banks are selling the non-performing notes rather than foreclosing on them. Maintaining real estate is not what the banks want and that’s why they are now willing to sell these non-performing notes at a discount.

Let’s discuss what NPN’s are in case you are new to this type of investing.  NPN’s are non-performing loan agreements, which became defaulted due to the non-payment of the mortgage. From 2002 – 2009 the banks financed many real estate transactions and then due to the recession, the actual value of the property declined very rapidly. Many homeowners during that period bought their homes to make a profit while the market was on the rise, but when the price of their real estate declined they failed to make the mortgage payments. Now, banks have over a billion dollars in NPN’s in which they are now selling at a much lower sales price.

The benefit of purchasing NPN’s is too simply to make a profit. You can buy the property for 30-60 cents for on the dollar. You can then either negotiate a new loan term with the buyer or foreclose on the property. However, you have to consider many things before buying any NPN. Here are some points for your consideration:

  1. There are different foreclosure laws in the different states, so get yourself acquainted about all the laws related to the foreclosure. Some states have flexible laws related to foreclosure and can be completed quickly. On the other hand, some states have a very lengthy process of foreclosure like Florida. So, do some initial research about the laws if you don’t want to indulge yourself in long judicial procedure of foreclosure.
  2. You must check the legitimacy of the notes and read all the related amendments and assignments of the note properly.
  3. You have do your due diligence before the purchasing the transaction, so try to gather as much information as you can from the lender before the due diligence process actually begins.
  4. If you are buying a multifamily property, then you may want to invest some money in remodeling to increase the selling price of your property in the future. The buyers who are willing to buy your property would not want to buy unmanaged properties from you or may not be willing to pay higher prices, which you may expect for your profit.
  5. Make sure to pay the real estate taxes and homeowner’s association dues after buying the property. Many public associations and municipalities of some states are liable to foreclose on the property for the reimbursement of the non-paid tax by the lender. Although the Federal Regulators are not willing to get involved with the NPN’s; the local jurisdictions are willing to and you must confirm he amount of any unpaid taxes.

The Real Estate market has been improving from this last recession and now the prices are on the rise. Now is the right time to invest in NPN’s to make some profit on a short term or long term basis.

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Accepting payments on the sale of real estate might have made sense at the time, but circumstances change.

Many sellers discover they would now prefer cash today rather than the small amount that trickles in each month.

Here are just a few reasons people have sold all or part of their seller financed mortgage notes for cash:
 

  • Retirement
  • Taxes
  • Investment Opportunity
  • Expensive Medical Care
  • Vacation
  • College Tuition
  • Unexpected Financial Changes
  • Peace of Mind – no more worrying if the buyer is going to make late payments or having to foreclose
  • Accounting headaches, IRS regulations, paperwork hassles and the list goes on…

 
The only way to decide what is best for your situation is to know the options available.

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