Notes sometimes are referred to as promissory notes or notes payable. A note essentially represents a promise to pay a certain amount in the future. Note buyers can purchase various types of debts including delinquent, mortgage and commercial notes. After note buyers purchase notes, they become the creditors until the note is paid or repackaged and sold again.
Develop a marketing strategy, especially if you plan to sell several notes. For each property, you should address any potential issues, such as risk of default or bad location, so that you receive a high bid. Consider various quotes before closing on a deal.
Perform a due diligence search on the note to verify that the information is valid. For instance, if you are selling real estate-related notes on behalf of the owners, check the deeds, titles and loan documents. There should not be any other parties who own or have liens on the notes. Some scam artists create fraudulent notes, such as prime bank notes that are advertised to carry high-yield returns.
Contact local private (e.g., individuals or small numbers of people) and institutional investors (e.g., investment companies). Investors or investment companies often are well known throughout the financial community. Representatives of title companies and banks generally can provide referrals.
Obtain appropriate licenses. Notes often are considered securities and must be sold by licensed agents or brokers. The Financial Industry Regulatory Authority (finra.org) is a regulator that oversees brokerage firms and securities representatives.
Attend a property tax sale and network with participants who often are active investors. Local governments hold tax sales to settle tax debts. Eventually the properties are sold if the taxes remain outstanding.
Search through online listings. Many note buyers have websites that describe their services. Examples include notesbuyers.com, heritagenotebuyers.com and colonialfundinggroup.com. Remember that it is rather easy to create a seemingly legitimate website so review the history of the business, its owners and its managers before closing on any deals.
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