From the first quarter of 2016, RealtyTrac reported that there are over 6.7 million properties that are financially underwater.

These home loans that are past due on payments are called non-performing notes. For whatever reason, the owner is no longer paying the monthly mortgage payment and banks don’t particularly like this. The bank wants to get their money and when this doesn’t happen, they sell off large amounts non-performing notes to hedge funds, other banks, private buyers, etc.

While they’re sold to the highest bidder, they’re still in most cases heavily discounted. It provides an opportunity that doesn’t have to end in foreclosure. With you essentially becoming the bank, you have options as to how you handle payments.

You’re able to renegotiate the monthly payments to help turn it into a performing note, which is making you money. You don’t have to move anyone out of the house and you can avoid costly fees associated with the foreclosure process.

It can be a win-win for everyone.

You can be their second chance. Having the opportunity to come up with a repayment plan (still according to the property value, not at the price you paid) can give you passive income many people are looking for. Notes are easier to have multiple of when compared to brick-and-mortar properties and they’re a way to bulk up your investment portfolio.

non-performing notes

Did we mention that you don’t have to worry about property management type issues? You’re acting as the bank. Not the property manager. This means no 2AM phone calls about a flooded bathroom or roof leak.

To find out more about various exit strategies you have with non-performing notes, check out our Master Class on ‘Profiting with Non-Performing Notes’!

I'm the content manager here at and have a passion for real estate investing and have a background in writing and business. I focus on providing content that is aimed for newer real estate investors and those who have the drive to become a full-time real estate investor. With so many strategies to utilize within the real estate investing industry, I aim to break down any barriers and showcase that real estate investing is obtainable and can truly bring financial freedom.