Real estate success can change without notice. COVID-19 has impacted the market drastically, and we will feel its effect for years to come. Investors know this and have bought non-performing real estate notes for cheap. The office of Arturo R. Alfonso, P.A., is here to help with your legal real estate questions. Stop searching for “estate lawyers near me in Miami.” We are here to help!
Real Estate Notes Basics
A real estate lien note, borrower’s note, or mortgage note is signed by a home buyer or investor purchasing a house. If they are unable to pay cash, they receive a loan. Part of this loan serves as a down payment, and the rest is borrowed from a bank or other lender. The lender has the borrower sign a note, promising to repay the debt. While this note is not in public records, it is a legally enforceable document that outlines who borrowed money and from whom, the amount of money borrowed, the interest rate, the timeline for repayment, and what happens if the loan is defaulted on. One of the ways to categorize these notes is by their payment history.
A note is “performing” if the mortgage is paid on time, without missing a payment. A note is “non-performing,” if the borrower has not paid it in the last 90 days.
Benefits Of Buying Non-performing Notes
Banks and other lenders care about getting their money back. They sell non-performing notes to increase their chances of getting a partial return on their investment, even if the banks sell the liens at a discount. Buying a note and mortgage means you step in for the bank. You collect the remaining debt and receive the payments that come in from the borrower. There are two other perks. If the borrower defaults on the notes, you, the investor, can take possession of the property, sell it, rent it, or even fix and flipping it. Also, you can modify the terms. You can lower the balance, reduce the interest rate, or decrease the monthly payment. Done right, you can earn more money.
Things You Should Consider
Before buying a non-performing note, consult your attorney. If you do not have one, stop searching “estate lawyers near me.” We are here for you. You and your attorney should evaluate the following:
- the original loan application and all its supporting documents
- any appraisal the bank currently has
- the borrower’s payment history
- the property insurance and taxes
- the property’s potential on the market
- the borrower’s litigation background
- the physical condition of the property.
You want to make sure that the loan and interest are not against any rules or regulations while also ensuring that the property is a worthwhile investment.
Non-performing real estate notes provide an excellent opportunity for investment and estate holdings. Arturo R. Alfonso, P.A., is dedicated to helping the Miami area with all their real estate questions. Stop searching “estate lawyers near me,” and contact us today for more information.