How to find notes

June 2019, Loveland, CO.

How do you find and buy mortgage notes? Try out these tips for success.

To buy notes you want to find people who are willing to owner finance or arbitrage. Look at properties within 5 miles of you. Try to buy with really low rates, or use a wraparound mortgage. In some situations, the buyer will have great motivation to move the property. 

Driving for dollars. Look for the ugly houses, find out who owns it, ask them if they want to let you buy it. 

Look for empty houses you find as you are driving by them. Look for houses that need work, going downhill, not full value, lots of things need to be up to date. Check for weeds or snow that has not been removed from the driveway.

You could stop and knock on the neighbor's door, they might know who lives there, who the borrowers were, or their name. You really don’t want to go door knocking if you can help it. Too many things can go wrong. Be very careful when doing this. Rough neighborhoods, avoid them. Don’t waste time with mailers to these areas. Target properties with a lot of equity or low-interest rates.  

Check zoning offices, coding offices, zoning or code violations, obits, deceased friends, with survivors that live out of state.

Check the county/property records. Send a piece of handwritten mail addressed to the owner with something bulky inside it, or send it to the remaining family. This makes it seem very special, and they are more likely to open it. Offer a cash offer to close quickly. Send mail 1-2 weeks after people’s passing if needed. Sometimes it just takes sending out mail to areas you want to buy the properties to get a callback.

If they call you that’s good. The power of God is in full force.

If the property is tied up in probate, has a lot of people to sign off on it, there was no will, or the property needs too much work, you might want to avoid it.

Be very sensitive to the family in the case where someone has died. Don’t ask to look at it the property. Apologize and ask if there is anything you can do.

Here are more ways on how to do research. Track down borrowers name, check the white pages for the phone number. If you find the borrowers live in a different city that is a good sign. If you can’t find a phone number, try to call the next door neighbor. Send two letters. One to the borrower and next door neighbor. Ask if they could pass along the info, that you might want to buy the house.

Some ways to ask include: Sorry, but “do you live at this address”, or “do you know who lives next door?”

“Don’t want to bother you but I want to talk about buying his house”

Usually, they are more than happy to let you know who it is. That is how you might get the borrower or owner on the phone.

It could be a situation where there was a divorce, the mortgage was left up to the wife, she moved on and now everything is falling apart, nobody has lived there in years. Maybe the husband isn’t having any luck trying to get wife to sign off to sell it, and the husband has been paying the mortgage all along. If he was not wanting to negotiate terms with his ex-wife, the best bet would be to try to talk to their divorce attorney.

Ask the seller to meet you at the property to look it over once they say they are interested in selling.

Find situations where the house is not worth the price they are asking for. Things like; it needs work, worth barely what they owe, $15 - $20 grand or less in equity, past due notices, etc., whatever you can find to work it out. Then make it easy to sign off on.

Say: You can sell to me with what you owe or we can owner finance. The first thing to try and do is make the agreement to take over the payments.

More options you can find include commercial notes. Smaller hedge funds usually always have something on their books they are looking to sell off. They have no patience or time to do. Target smaller banks, hitting foreclosure list. Ask them, what do you have in my area?

Build relationships. Negotiate real estate funds, buying larger portfolio notes. They have stuff on books. Often they are selling bottom tier assets, lower value stuff is not worth time unless you can negotiate with hedge funds - not banks.

Check the last quarter of the fiscal year. Make an options agreement with the bank for the whole list. Non-exclusive option agreement. Ask them to “Give me your price on these, give me 30 days, I’ll be the only person that markets. Whatever above the price, I keep” then use your marketing skills.

Find investors looking for properties. Use Facebook, Craigslist, Linked-In, Instagram, there are so many ways, you don’t need to go in the neck of woods to find these people.

If you find anyone, ask to provide a copy of the contract first right of refusal to take the property down. Use an option agreement.

Contact eviction leads to see if they are interested in selling the house. See if they are tired landlords.

Look for properties owned by a borrower that is out of state, and they are tired of it.

It has no property manager in place, or it’s hard to find one.

Look for out of state borrowers. There are a lot of data for people. Get some Investors in different counties to build up a good leads list. FInd those owner financing deals where people were trying to sell but didn’t sell.

Properties where the time expired listings bombarded by new realtors about listings. Look at buying the house of people having a hard time selling the house.

See if they will sell on terms of 0% interest, the principal is rapidly reduced rather than financing. Later do a loan modification or sell to pay them in full.

If you start seeing “everyone goes” they could be selling off the property at a discount. This is distressed debt. Try to buy it at the price owed, 0% interest, protect the consumer 100% of the time.

Go for commercial space. There is a huge opportunity in the area of distressed notes there.

Don’t do class A’s. Do class C or B, besides apartments. Commercial assets. They have a lot.

They like assets with two commas and they have a lot of properties that you can pick up today at a discount. Mixed buildings, strip malls, box stores, small box stores, just gotta know what you are doing.

A whole angle on the commercial side, is you gotta make sure to pull your own numbers. Check cash flow, what is the CAP rate, tenant rate. How much cash it brings in. Can you increase occupancy or rent?

To sell storage, be careful if it’s not 100% occupied, check 5-10 mile radius to see another occupancy levels are high.

If they are all at 65%, so will you. You don’t want to lose. Look at rents. To see if oversaturated. Bank will try to sell it to you but say no, sorry…

If you are new to the game, try residential first.

Avoid “car washes” if you don’t have any experience, walk away because they can be profitable or a drain. Reach out and talk to others the have that asset.

The master lease is where you come and negotiate a wrap around, $4000 regardless but you keep the income above that. Great way to make money.

Stay in your backyard. Learn the market. Spend time to build relationships. Talk to individuals, etc.

If you have any more questions or want to buy one of our non-performing notes, you can schedule a call to talk with me or a member of our talented staff at www.dskinvestments.com.

Want to learn more and get support? Join other talented, good people inside our private Facebook Group Real Estate Immersion, for investors, buyers and sellers to network and learn all the ways of creating cash flow investing in Real Estate.

Real Estate Immersion

Duke Marquiss - The Note Wizard

DS&K Investments, LLC

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