Friday, August 13, 2010

How To Find Good Mortgages To Invest In - Part II

In Part I we discussed some of the ways to find “Mortgages”, but we didn’t get to the “Good” part. Once the word gets around, AND IT WILL, that you have money to invest in mortgages, you will have several to choose from. “WORD OF WARNING”: Don’t get too eager just because these are the first ones and you are excited to buy a mortgage. You MUST do your Due Diligence or your career as a ‘Mortgage Investor’ will quickly change to ‘Owner Of Real Estate You Don’t Want’.

Just like other investment opportunities, be it Stock Market, Commodities, etc, there are good and bad investments in mortgages. However, there is one GREAT difference. If you do your diligence, you will be able to know you made a good investment and not have to depend on speculation. That’s one of the main reasons I like mortgage investing as opposed to many other investments. “YOU ARE IN CONTROL OF YOUR MONEY”.

OK, lets talk about Due Diligence and other factors when analyzing a mortgage. The note broker calls and tells you he/she has a mortgage for sale; or, maybe you located a private party through the newspaper who has a mortgage for sale. NO DIFFERENCE IN DUE DILIGENCE. My point is: No matter where or how you find the note, you still use the same safety precautions.

If I could pick out one single area that has caused investors the most problems, it would be greed. Trying to get the highest dollar return and not checking out either the property securing the mortgage and/or the party making the payments on the mortgage. This includes pressure such as, “You have to act fast or this deal will be going to somebody else.” If this situation arises, my advice is to say, “Well that’s too bad, but I’ll have to let it go.”

Mortgages available for sale are kinda like buses – “If you don’t get this one, there will be another one along in a little while.”

A good place to start is to check out the broker or the party that brings you the opportunity, unless of course, it is a mortgage for sale you located yourself.

The next party I would check out (as much as is practical), is the party selling the note.
Is this a “Mom & Pop” type deal wherein a private party has sold probably the only Real Estate they will probably ever sell and carried back a mortgage?
Or, Is the seller a “Flipper” who buys mortgages and resells them to investors?
Or, Another kind of “Flipper” who buys a property and does nothing to it and flips it to another with a marked-up price with nothing down?
Or, A rehaber – a party that buys property in need of repair, fixes it up and resells it to another party?

The point is – There are all kinds of people who sell property and finance it for the buyer. Also, there are many buyers who want a home and don’t really care about price or interest rate. They are more concerned with; how much is the down payment, and how much are the monthly payments.

These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.

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