Buying Defaulted Mortgages – Multiple Exit Strategies Needed

During a conversation the other day, a new Note Buyer told me that he decided to start investing in buying defaulted mortgages. He had been wholesaling properties for a very long time prior to this.

What worried me was when he said: “Dean, I want to get into buying defaulted mortgages in order to keep people in their homes and get some good cash flow.”

Please don’t get me wrong, of all people I would be the first to admit that Humanity does count. But…

Don’t lose sight of the forest for the tree.

Don’t Try to Use Only One Exit Strategy For Buying Defaulted Mortgages

It will not work.

You see, you may WANT to pursue A SINGLE exit strategy for the defaulted mortgages you purchase (in this case, he was looking to re-perform all the notes he bought – possibly by modifying them all – and then to hold them for cash flow).

Buying Defaulted Mortgages: Multiple Exit Strategies Are Needed

If you want to be successful in your investments in defaulted mortgages, you need to be like Rafael Nadal.

Nadal can do it all. He has a great serve, an awesome forehand, and can play an excellent game on both the grass and clay court.

You should follow the same idea when buying defaulted mortgages. Pursuing multiple exit strategies will make your note buying business more profitable.

Be careful you don’t “stick yourself” with one note buying strategy.

Using Foreclosure as a Buying Defaulted Mortgages Tool

One useful tool to get a borrower to cooperate with you in getting a loan modified can often be to start a foreclosure action.

And Why?

The foreclosure action acts like a wake up call to someone who has been missing payments on a regular basis. That in combination with your help in their loan modification may be just what they need to get going to work their way out of their situation.

Be careful not to fall into the same trap as the investor I talked to.

If you want to be successful in your Defaulted Mortgage Buying business, 1 Exit Strategy is not enough.

If you want to do well in the note buying business, you need to be a jack of all 5 Exit Strategies.

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