How to Buy Notes - A Note Buyers Dream…Understanding Your Borrower’s Needs
Mar 28, 2009 Real Estate Properties
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One Lesson on How to Buy Notes
Its funny how the little things (so u think) are actually a big deal for your borrowers.
What am I saying?
I have two stories to share with you. They are about Natalie and Judy, 2 borrowers that were included in one of my portfolios.
A Story on How to Buy Notes…Introducing Natalie
My first example is about Natalie, she had a performing first mortgage that was included in the pool of non-performing notes that I purchased. Natalie was an ideal borrower, whose mortgage payment was due on the first of every month. She owed $93,000 and paid a monthly payment of $680 like clockwork, the only thing was that the payment was received around the 5th of every month.
So, when I called Natalie for the first time, guess what her biggest request was? She asked me sheepishly if I might be able to push her payment due date back from the 1st of the month to the 7th of the month so that her paycheck had time to clear in her account!
What does this have to do with make money as an investor who is learning how to buy notes?
Because of one simple thingin the market today, and just in human relations in generalthere is one fact when it come to the financial relations of people.
It’s sometimes the little things that matter the most.
As an investor in non-performing notes, when a borrower like Natalie asks me if she could pay her mortgage a few days after her due datehow did you think I responded?
I said of course, what date works for you?
You mean, you CAN do that for me? She sounded incredulous.
Thats all it takes, just me asking?
Wow. Eye-opener for me in this business of how to buy notes, I tell you. That something as simple as changing a due date could make such an impact.
So of course, my next step involved asking Natalie if I could refinance her real estate note. I asked her if I could put her in touch with a specialist that worked on my team, and because she now trusted me.she provided all the information that I asked from her.
A Lesson Learned on How to Buy Notes
If you actually listen to what your borrower is saying, and can determine their needs, you can create a relationship based on the fact that you helped them. Anytime that you help someone in need, they automatically feel an obligation. Use that feeling of obligation to your advantage.
Another Example of How to Buy Notes, Judy’s Story
I have a 2nd story that I want to share with you. This one is more recent.
Judy is from Tennessee, she has the cutest accent that Ive ever heard.
Her accent is so sweet, you cant help but smile every time you hear her voice.
And when Judy spoke, what do you think she said in regards to her defaulted mortgage?
Dean, I owe you all a HUGE thank you for paying my taxes.
My first thought wasWhat?…taxes?? So of course, I looked through my file to see what I did. I quickly realized that after running my tax check (something we do towards the last business day of the month), it was in my best benefit to pay her taxes current.
How to Buy Notes-Benefiting Both Yourself and Your Borrower
We advanced it to her loan obviously (property taxes advanced by you can be charged to the principal of the loan), and since her delinquent note rate is pretty high, we get to accrue interest on that advance. So from my perspective, it was both protecting our interest as well as making a smart business decision that would make us money.
And from hers, it was the sweetest and nicest thing we could have done, because we were looking out for her. The actual words she used with me were: Dean, I want to thank you for helping me keep my house. Ive been here 20 years and now Im finally caught up thanks to the patience youve had with me.
I was floored. Absolutely amazed at how a simple decision to protect our real estate note position, pay the taxes owing so they wouldnt fall further delinquent and threaten a tax deed sale (Tennessees a tax deed state, not a tax lien state - more on that in a later post), could be perceived by the borrower as a generous move to protect her own interests.)
You can only imagine how the rest of my day went, it was wonderful! Nothing feels better than to sit there and receive such gratitude over the phone. It really touched me. In the business of buying notes, experiences like this dont happen very much.
And I also learned today how useful it would be to explain advances to pay taxes and insurance for any other borrower in terms of helping to protect their home and to help them to protect their home.
A situation where everyone wins doesnt seem so clich now does it?
Not when you look at what Natalie and Judy taught me about the experiences in how to buy notes.
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Tags: buy notes, discounted mortgages, Foreclosures, how to buy notes, learn how to buy notes, Mortgages, Non Performing Notes, note buying, profit from buying notes, Real Estate Notes, Real Estate Properties
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