New to note buying

[Linda R.]

Can someone tell me what I would be buying if I won this auction? What does nonperforming mean besides the obvious? Thank you in advance!

Linda

Auction.com presents the opportunity for an investor to acquire a non-performing mortgage whole loan with an interest rate of 6.79% and a maturity date of 8/1/2016. The loan is secured by a 32-unit apartment facility that consists of 8 buildings. In addition to rental improvements, other site improvements include an in-ground pool and a laundry room. The apartments units were constructed in 1984 of wood framing, and gross building area is 24,640 SF. There are 31 two-bedroom apartments and 1 one-bedroom apartment. The buildings are constructed on a crawl space with a concrete foundation and walls, and wood/stud/wood siding exterior walls and wood joists with plywood flooring. Interior finishing includes: painted drywall ceilings and drywall partitions, carpeting, linoleum and hardwood flooring. Average size of the two bedroom units is 750 SF, while the one bedroom unit is 650 SF. The individual units are served by electric forced air heating and cooling units.

There is no Broker Co-Op for this asset.

[Jon Holdman]

It means if you have a buyer's broker you want to get paid if you buy this, you will have to pay them out of pocket.

This isn't really something you can finance. If you have the cash to buy this note outright, this could potentially be a deal. But to own it, you're going to have to do a foreclosure or persuade the current owner to hand it over to you with a deed-in-lieu.

Assuming you want to foreclose and take possession, and not get the borrower back to paying, you need to buy at a price that allows you to pay for the note, deal with the legal work to foreclose (or do a deed-in-lieu), do whatever it takes to get the property back into good running condition, and deal with any senior liens and still be in cheaper than just buying such a property outright.