Buying Defaulted Mortgages – Don’t Focus On One Exit Strategy

The other day I had a conversation with a new Note Buyer who informed me that after a long career in wholesaling properties, he was going to start investing in buying defaulted mortgages.

What worried me was when he said: “Dean, I want to get into buying defaulted mortgages in order to keep people in their homes and get some good cash flow.”

I do admit that Humanity counts, don’t get me wrong. But…

Don’t lose sight of the forest for the tree.

One Exit Strategy Is Not Enough When Buying Defaulted Mortagages

It doesn’t work.

Even if you want to pursue one exit strategy for the defaulted mortgages that you have just purchased, you can’t. (in this case, he thought that he could generate cash flow by re-performing all the notes he bought by modifying them.

How To Buy Defaulted Mortgages: Multiple Exit Strategies Are Needed

If you want to be successful in your investments in defaulted mortgages, you need to be like Rafael Nadal.

Nadal is a really well-balanced tennis star. He has an amazing serve, excellent grass court experience, plays solidly on clay, and can fire a wicked forehand.

Follow the same approach when buying defaulted mortgages. Learn how to pursue MULTIPLE Note Buying Exit Strategies at once.

Don’t get stuck with just one note buying strategy.

Buying Defaulted Mortgages – Using Foreclosure as a Tool

One useful tool to get a borrower to cooperate with you in getting a loan modified can often be to start a foreclosure action.

And Why?

Because for someone who has been missing payments regularly and hasn’t been current for a while, sometimes a wake-up call with a foreclosure notice (combined with a helping hand from you to help them with a loan modification) is what prompts them to get their act together, take control of their situation, and to work their way out of their delinquency.

Be careful not to fall into the same trap as the investor I talked to.

1 Exit Strategy for your Defaulted Mortgage Buying business will not work. It will not be enough to make you successful.

You really need to be a jack of all 5 Exit Strategies to do well in the note buying business.

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