There are different types of mortgage loans a mortgage note buyer can consider investing in. Often the least risky loan is that on a residential mortgage for the first position loan. Second position loans on a residence are considered riskier because if the borrower defaults on the loan, the first position loan takes precedence. You will want to take a very close look at the borrowers’ credit history, stability income and cash reserves to ensure they are able to make the monthly payments without an issue. You can also consider investing in loans on investment properties such as multi-family, office, retail and so forth. These investments take a keener eye, and if you are not knowledgeable in income property investments yourself, you should have a financial expert review the cash flow statements of the property in detail. You may also want to speak with a commercial real estate expert about the property as well to ensure the property is able to be sold in the event there is a default.
A mortgage note buyer can enjoy considerable benefits from a stable income stream if he or she takes the proper steps to ensure that the loans purchased have minimal risk associated with them. If you have considered this investment opportunity previously, take a look at how you can benefit from purchasing loans.