A non-performing mortgage is the one that has not been paid and is in the danger of foreclosure by the bank or note holder. The top California property investment advisors, BGK Investments, explain how you can make the most by investing in a non-performing mortgage.
The best option when you invest in a non-performing mortgage is to get real estate at big discounts, and sell them quickly for a neat profit. The quick getaway approach offers you the great benefit avoiding delinquent homeowners.
Long Term Hold
The second approach involves buying out the earlier owners. Get them to sign a Deed in Lieu, and leave the property. Since you decided to invest in the non-performing mortgage and now own it, you avoid foreclosure fees. Now, rent the property to a tenant for a long term hold. Some people choose to sell the property quickly.
Turn It Around
This approach involves turning the non-performing property around. For example, you invest in a non performing mortgage for $50,000 but the unpaid principle is $200,000 with a 10% interest rate on the mortgage. You cut the unpaid principle in half ($100,000) and decrease the interest rate to 6%. This is now a new mortgage. After few months of timely payments by the homeowner, the non-performing mortgage you invested in becomes performing and ready to be resold to another investor.
Expert California property investment advisors, BGK Investments, specialize in distressed assets and fair business dealing if you want to invest in non-performing mortgages.
Anyone who wishes to sell a mortgage note should know its market value so that you get the best deal. Top mortgage notes buying companies in California, such as BGK Investments, can help you ascertain the true value of your mortgage note. Here are the most important things that are considered while buying mortgage notes in California.
TYPE OF PROPERTY
- The type of property held by the mortgage note is obviously the most important criterion. Equally important is the said property’s current market value.
- The interest rate on the face of the mortgage note.
- The prevailing interest rate – Real estate experts at BGK Investments, top mortgage notes buying firm in California, say that increasing mortgage interest rates will negatively affect the market value of fixed-rate mortgage notes.
- The size of the cash down payment made at closing.
- Owner’s equity the borrower has in it.
- The number of monthly payments remaining on the mortgage note. Shorter term mortgage notes are valued more highly than longer term mortgage notes, say experts at mortgage notes buying company, BGK Investments at California.
BORROWER’S CREDIT SCORE
- The higher the borrower’s credit score, the higher the market value of a mortgage note, say mortgage note buying experts in California, BGK Investments.
Make sure that you go to a mortgage note buying company that offers you honest deals. Only a few experienced and reputed companies, such as BGK Investments in California, will help you get the best value for your mortgage note.
Property investment experts at California, BGK Investments explain hot it is determined whether a particular mortgage note is sale-able or not.
Down payment is the primary factor to decide whether a note is any good. The down payment (or cash from the property buyer to property seller at the time of sale) will determine if the loan can even be sold at all. The more money a note seller will collect as a down payment, the more money the note will sell for when it comes to liquidating the property. To get great offers from investors, there should be at between 20 and 30%, with 10% being the least down payment for any offers at all. Ask California’s top property investment experts, BGK Investments for the best deals on mortgage notes.
CREDIT OF BORROWER/PROPERTY BUYER
The higher the credit of the property borrower, the more money the mortgage note will sell for. If their credit is 600 or higher, the note has a chance of selling.
RECOURSE vs. NON-RECOURSE
If you are selling your property (commercial or residential) to a corporate entity, family trust, non-for-profit, etc., a mortgage note with no recourse (aka – no personal guarantee/no guarantor) can mean a loss of thousands of dollars. The guarantor should also have a good credit score, for it to make any difference. Investment properties advisor, BGK Investments, provide you the best possible service on every note transaction as if it were their own.