During a conversation the other day, a new Note Buyer told me that he decided to start investing in buying defaulted mortgages. He had been wholesaling properties for a very long time prior to this.

When he said to me “Dean, the reason why I want to get into buying defaulted mortgages is not only for the cash flow, but I want to keep these people in their properties. This is what worried me.

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

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

When Buying Defaulted Mortgages, Don’t Only Focus On One Exit Strategy

It just won’t work.

You see, you may WANT to pursue A SINGLE exit strategy for the defaulted mortgages you purchase (in this case, he was looking to re-perform all the notes he bought – possibly by modifying them all – and then to hold them for cash flow).

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.

With an amazing serve, grass court and clay court experience, and a great forehand, Nadal is a well balanced tennis star.

You should have the same approach when you are buying defaulted mortgages. Have the ability to pursue multiple exit strategies at once in your note buying business.

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

Buying Defaulted Mortgages – Using Foreclosure as a Tool

When trying to modify a loan, sometimes the only way to get a borrower to cooperate with you is to start the foreclosure action.

And you might ask 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.

Don’t fall into the same trap the investor I talked to did.

If you want to be successful in your Defaulted Mortgage Buying business, 1 Exit Strategy is not enough.

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

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