How to Buy Mortgage Notes if You Have Little or No Money

Real estate investing is a hot market but also one of the most expensive for initial entry. However, the cost of investing should not deter you from finding a way to get started. Buying mortgage notes allows you to build wealth by foreclosing and taking the property or restructuring the loan with the borrower so that they are able to make the payment and it is lucrative for you as the lender. The key to investing in notes is using other people’s money until you have you own.

Silent Investment Partners – Your Work, Their Money

Investors with little to money have one huge benefit to offer a partner that has plenty of money to spend. Hard work. There are plenty of individuals looking for a great investment. Angel investors, business professionals, and busy entrepreneurs are just a few of the types of people who may be interested in putting up the money to back your new venture. Once you find someone who is interested in collaborating, the key is to show them how you plan to make money using their investment.

Mortgage notes are often available from banks or private hedge funds in bulk. While each note in the bundle may have different benefits, you will need to purchase the bulk lot and work each note individually to your benefit. You will use your partner’s money to buy the notes at a significant discount from the initial lender. Then, you will either work a deal with each borrower to either terminate or renegotiate the loan on your own or split the notes between you and your partner. You will repay the silent partner for their initial investment with interest but the remaining profit is yours to keep. Your goal is to leverage the partnership to the point where you make enough money that you no longer need a silent investor.

Equal Partners and Bank Loans for Initial Investment

As you become more experienced in your real estate investing career, you will begin to accumulate wealth, which will allow you to work with partners and banks in a different manner. When you have some of your own money to invest, you can collaborate with other investors as an equal partner to purchase larger bundles of non-performing notes or you may become the angle investor to a newcomer into the market. Either method will allow you to continue to purchase notes at a discount and enjoy a healthy return on investment.

If you are no longer interested in collaborating with other individuals, you may consider approaching a bank for a loan. Banks may consider a short-term loan if you have collateral and a solid business plan that details how you will purchase the mortgage notes and make a solid return giving you the ability to repay the bank.

Reaching your Goals

The goal of any investment is to make a reasonable return on the money that allows you to enjoy some of the profits while reinvesting the balance. Whether you start with no money and a silent partner or have a small amount to invest, choosing non-performing mortgage notes can be a solid wealth-building tool.