Note Holder Acquisition

[Colin Smith]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Colorado Springs.

Purchase price: $200,000
Cash invested: $25,000

A note owner sold a note in 2007 with seller financing. This owner had stopped paying the mortgage for the last several years and the note holders family did not know what to do about. What they wanted most was to have payments reinitiated for monthly cash flow from the note. Long story short, the owner received a lump sum of cash for a deed in lieu of foreclosure, I attained ownership of the property, and the note holder reestablished the original note.

What made you interested in investing in this type of deal?

The out of pocket cost was very little. I only paid for the renovations after the acquisition. The property was overall in fairly good condition.

How did you find this deal and how did you negotiate it?

The note holder was a current client of other services.

How did you finance this deal?

Seller Financing and Hard Money

How did you add value to the deal?

Came up with a creative solution that made it a win-win-win for the note holder, myself, and the owner of the property.

What was the outcome?

The owner received a large cash payout. The note holder has a new note originated based on the original balance and term of the loan. I acquired a new property consisting of a house and cottage that needed minor repairs.

Lessons learned? Challenges?

Patience and follow up pays off.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Real Estate Attorney - Tim Priebe