I had a conversation with a new Note Buyer the other day, and he told me that he was launching himself into buying defaulted mortgages after spending a long time wholesaling properties.

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.

Please don’t get me wrong, of all people I would be the first to admit that Humanity does count. But…

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

Don’t Try to Use Only One Exit Strategy For Buying Defaulted Mortgages

It will not work.

A SINGLE exit strategy for the defaulted mortgages that you buy may be what you want to pursue. (in this example he was looking to hold all the notes as cash flow by modifying them and getting them to re-perform).

Mulitple Exit Strategies Are Need When Investing In Defaulted Mortgages

If you want to be successful in your investments in defaulted mortgages, you need to be like Rafael Nadal.

Nadal can do it all. He has a great serve, an awesome forehand, and can play an excellent game on both the grass and clay court.

You should follow the same idea when buying defaulted mortgages. Pursuing multiple exit strategies will make your note buying business more profitable.

Don’t limit yourself to one note buying strategy.

Using Foreclosure as a Buying Defaulted Mortgages 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.

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.

Be careful not to fall into the same trap as the investor I talked to.

Don’t think that 1 Exit Strategy to your Defaulted Mortgage Buying business is enough to make you successful.

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