Non-performing note exit strategy

[Daniel M.]

After reading several books about note investing and attending some local REO networking events, I'm still not clear about the exit strategy when purchasing non-performing notes.

Let’s say there is an offer by a hedge fund for the following property:

Principle Balance: $34,255
Payoff: $46,035
Property value: $208,650
LTV: 16.42%

The hedge fund asks for 70% of the payoff.

My general question in NPL with equity would be; how would I maximize profit. I assume, if the owner doesn’t catch up with the payment, in case of foreclosure, I would probably get back the amount I have invested but every excess amount would go to the owner.

I could do a deed in lieu but why would the owner do that if he could wait for the foreclosure and profit there? 

[Jay Hinrichs]

I think you answered your own question.. either way as a hold or beneficiary of the note. if there is this TRUE equity.. the only way you tap into it is a DIL

a public auction will 99% chance get bought 3P  and you would simply be owned what ever your note called for plus costs. balance would go to junior lenders or creditors and if none then the owner.