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Real Estate Investing – How To Wholesale A Non-Performing Note Deal

Below is a transcription of the video above

house-flippingI just wanted to come and make this video to you today from my desk, from my home office, and discuss with you how you can start creating deals out of thin air. What I mean by that is getting involved with notes (either performing or non-performing). A lot of individuals have been reaching out to me over the past weeks or so asking me to give more content on notes. Here you guys go. Everybody that’s been requesting information on notes, here is the information that I want to give to you. It’s one of the most lucrative strategies that we’ve been using within our own investing business that really allows us to create deals out of thin air that normally wouldn’t have been there without us executing these particular strategies on non-performing notes.

Keep in mind, when we’re going over non-performing notes, we have relationships already with bank asset managers, and at that level the bank asset managers we’re working are at the state level and regional level. A lot of them are much smaller. You’re more than likely, unless you have a $100 million proof-of-funds letter, it’s going to be extremely difficult for you to try and get into the top 25 national banks. Trying to crack the code to getting in with them is extremely difficult, unless you have, like I said, that nine-digit proof-of-funds letter, which most of us mom n’ pop investors don’t have. You can pair up with hedge funds, they do have those proof-of-funds letter that you can give out, and you can get access to what’s called data tapes or blocks of properties to review. They typically do come in 10,000 property package units or higher.

Relationships Are The Key To Making This Work

relationship-handshakeWe have those relationships. We also work directly with hedge funds. We work with private sellers. We work with some private equity groups as well to obtain our non-performing notes. We really don’t work too much with brokers. A lot of people have questions on brokers. We don’t work a lot with brokers, mainly just because they have what’s called a daisy chain product. If you want to know more about what daisy chain is, leave me a comment below. I’ll be more than happy to make a followup video about it. If you are watching this on my blog, just leave me a comment below and I’ll be more than happy to make another video explaining what daisy chain is, or you could just simply google the term.

What we do is, with this particular example of how we find non-performing notes, right now it would be in a note stage. Somebody has a mortgage on their house. They’re in default, obviously, by more than one payment, to cause the notice of default (NOD) or lis pendens to be started on that particular property. What we typically do at that stage is when we find the note within that non-performing stage, we like to find out how far along the individual is. It’s very important that you know either your judicial or non-judicial state to where you know how far along the foreclosure process is going to be, and how quickly it can go to the auction. Some states are much faster than others.

I’m in a state where it’s a little bit longer. People can stay in their homes for years. If you move along with the right people, you can get that process expedited, and you could do it the right way to where you’re not kicking homeowners out on the curb. This is actually a really good option for somebody to really get back on their feet, because when they’re in this position, homeowners are suffering quite a bit from being in a state where they really may have lost a job, may have lost a spouse. We don’t know exactly what’s going on. A lot of it is from unemployment. Some may have to move out of state. The house now becomes vacant.

Becoming The Bank And Offering Solutions To Homeowners

lead_960Not trying to get too off track with where I’m trying to go with this is what we do at this point is once we get access to the non-performing note, and I’m just going to go over the example for this particular case study as just one deal. The one deal we get, we talk to the homeowner about doing what’s called a deed in lieu. We explain that to them, and I’ll explain that to you right now. A deed in lieu is where we discuss with the homeowner, “Hey, we’re going to become the bank. When we become the bank, we’d like to work out this option with you. It’s called the deed in lieu. It means that you are giving us back the property in exchange for you get to walk away without having to be foreclosed on.”

We take it a step further, and there’s only so much I can talk about on this particular video from a training perspective without really just taking your mind and just completely making you go around in circles. I don’t want to do that. I just want to give you exactly what you need. If you want to start doing this, great. If you have more questions, you could obviously leave comments below.

What we do is we typically talk to the homeowner about their options. The cool thing is once you become the bank you get to really make the rules per se. You still have to obviously follow RESPA, all the RESPA guidelines, but when it becomes the bank, when you become that bank, you can absolutely report back to the credit bureaus that the account has been paid and there’s a zero balance. Typically, how the large banks report this back as account settled for less than what’s owed, it’ll still show up as a zero balance but it’s going to negatively report the credit for at least seven years. What we tell them is, “Hey, we’ll report to the credit bureau agencies that this won’t affect you, so it’ll just be reported as account paid, zero balance, that’s it.”

Discussing The Deed-In-Lieu And How It Can Be Beneficial

That helps them either get back into an apartment, just have an opportunity to rebound from life’s roller coaster. It allows them to not have any possible security clearance issues. I know with government jobs, if they do see that you’re behind on payments or that you were in foreclosure, it could possibly cause a problem that way. Employers are looking at individuals’ credit as well, and if it’s dipped below 500 it’s going to definitely pose a problem. That’s something that you could also point out to them as well.

When we’re doing this deed in lieu option, I know a lot of banks out there like two, three years ago were offering anywhere between $1,000 to $2,000 for homeowners to just walk away and leave, but they didn’t know the ramifications, the negatives per se from doing a deed in lieu with a large bank. If that’s their only option at that point and they’re receiving that type of money for performing a deed in lieu and they don’t have an investor like us going out there and talking to them, then, yeah, this needs to be done the right way and it needs to be done accordingly within a timely manner.

What we could do is we could offer the same thing, $1,000 or $2,000 in cash, and they could receive that at closing. It’s not just me giving them the cash and saying, “Here, you’re good to go.” No. They’ll receive a check. Everything’s legal. It’s all out on the closing statement. Everything is going to be there to those homeowners, the owner of record that will be the ones receiving that type of money back.

The way we structure this, that’s for another time. What I want to tell you is that after this point, once you close on that first transaction, you now have an actual deed of the property. Instead of selling a note, you now just created a brand new property that’s completely off-market, not on the MLS, not on Zillow, not on Craigslist, not on Trulia, not on anywhere, no bigger pockets, nothing like that. Brand new property.

How To Have Your Cash Buyers Go Crazy For Your Deals

04a7cc0c6176ac4bb1a6232c83122802acbb00cf5e77f9b031042e649c7d2a61If you’ve got cash buyers, and if you’ve watched any of my videos, you know how important it is to me and for me to teach you that you need to have at least 10 to 12 quality cash buyers on your list in order to have properties quickly sold. I will tell you this. There are buyers out there that will just go crazy over deals that pop up like this. Main reason why? Off-market. They want off-market properties right now. You will be able to offer that, plus you’ll be able to offer deeply discounted properties. Normally when we do these types of deals we’re able to resell them. We buy low and we also sell very low, but we also make a really good profit. That’s an option that we can do there.

They get to close immediately. They can get access to the property. They don’t have to worry about anybody leaving the property. When we close our transaction, the owners of record will leave the property in good condition. That’s part of the terms that we come up with in the deed in lieu agreement. They leave the property in good condition. What I mean by that is I at least want the property in condition to where when I came out there, we visited with each other, I want it to be in either that condition or better. Hopefully that makes sense.

The buyers, the investors that you have on your list, will want these properties and they’ll scoop them up from you very quickly. I would highly recommend that you start doing this type of strategy within your own business, finding the non-performing notes, getting them to a stage to where you could do a deed in lieu, and you could do this all while being under contract with the investor that you’re purchasing the non-performing note from.

The Conclusion To This Strategy

Obviously, this is a lot of information for any individual to take in, soak in, so if you need me to make any followups to this, just leave me a comment below. Your comments really help me to really understand what’s helping you, what’s not, and how I can help you. It will allow me to just have a feel for what kind of videos should I be making so that you are getting deals under contract, you are getting deals properly flipped to your end buyers, and you’re making money. If all I can do from making one video and having multiple thousands of people watch it is help one person get that extra deal closed, I’m going to make it happen.

With that being said, I appreciate you taking the time to watch this. Make sure you definitely check out our free copy-and-paste messages that you can use on LinkedIn. It’s absolutely free. It’s not even really long. It’s just more or less like a report. I tell you what to do, how to do it, and how to be most effective with using those copy-and-paste messages. I give you five messages out of several thousand that I’ve tested over the years. I’ve come up with five that are truly effective with you gaining access to direct off-market deals, such as the non-performing notes that I was talking about within this video.

Thank You For Stopping By (Leave Me A Comment Please)

I appreciate you watching. I appreciate you stopping by on my blog if that’s where you’re at, or if you’re on my YouTube channel or Facebook. Make sure you give me a like on Facebook so that I can continue to create these and that you also get notified of when I create new videos like this. I will talk to you guys later. I’m going to make some additional videos that you guys can use that are going to be helpful, some stuff I’m going to be talking about some of the tools that I’m using that really help you stay focused and really help you out with having a more automated lifestyle, a better business, you being the CEO of your business.

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