In physical real estate, you check the roof. In notes, you check the .
Even if the note is for $100k, if the house is only worth $80k, you are "underwater." Note buyers look for a "protective equity" cushion.
When a property is sold via , the seller carries the mortgage for the buyer. The legal document created is a Promissory Note , secured by a Deed of Trust or Mortgage . buy and sell notes
Foreclosure timelines vary wildly. In a "judicial" state like New York, it can take years to seize a property; in a "non-judicial" state like Texas, it can take weeks.
Sellers usually offload notes for the "Three Ds": They might need cash for a medical emergency, a new investment, or they are simply tired of "clipping coupons" and want to exit the management of the debt. 6. The Risks In physical real estate, you check the roof
For performing notes, "seasoning" (a history of 12+ months of on-time payments) is gold. 5. Why Sell a Note?
Here is a deep dive into the mechanics, risks, and rewards of the secondary note market. 1. The Core Concept: Being the Bank When a property is sold via , the
Buying and selling notes is the ultimate "passive" real estate play. You have no tenants, no toilets, and no termites. You simply own the debt. However, it requires a high "financial IQ" to navigate the legalities of the paperwork and the nuances of the discount.