Distressed property notes are one of if not THE hottest investment ticket of the moment, but what are the best types of notes to invest in this fall?
Finding attractive notes on distressed multifamily properties has become very difficult after huge demand earlier in the year. While there can be deals to be found as a business-note buyer, it can take a keen eye to spot the profitable ones and lower end portfolios have been flying off the shelves at larger banks.
So, what’s the most profitable niche?
What’s most important when looking for the best investment to get into?
The best investments and note deals are often presented in those with less competition, which offer above average returns, are not overly complicated, offer full control, low volatility on the downside, large upside potential, and multiple exit strategies.
A number of recent movements in the real estate and mortgage industry have resulted in distressed property notes for jumbo mortgage loans becoming especially attractive to discerning investors.
Why jumbo mortgage notes? There are actually many reasons, including the higher interest rates, properties often being in better condition and in stronger neighborhoods and communities, as well as it’s more likely a more affluent borrower can catch up and reinstate a non-performing loan. With a recent surge in jumbo mortgage lending, which signals a potential credit easing in this category compared to a toughening up on conventional Fannie Mae and Freddie Mac loans means, it is also more likely borrowers can refinance or investors can turn these properties around quickly if they decide to foreclose.
Plus, with a renewed real-estate recovery underway, year-end bonus time coming, and the election almost over, luxury homes acting as security for distressed property notes promise to have better odds of turning around and performing without modifications or delivering a windfall in equity in a short period of time.