How do you make money from a loan that someone is not paying on?

How do you make money from a loan that someone is not paying on?

May 26, 2021

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By Mike Ruscica

Mike Rus

Mike’s coaching program is life-changing. What everyone really wants is to be truly happy. We all hear about it on T.V, YouTube, or Facebook ads but, unfortunately we don’t all know how to get there. Mike has a gift for helping you to open up and realize your true potential.

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How do you make money from a loan that someone is not paying?

It takes everyone some time to get their head around our process, but once you do, you will realize its full potential.

Let’s just take the first nonperforming note I ever invested in.
This was a Home Equity Line of Credit that was taken out in 2005 by a borrower that had purchased the home in 2002 with a standard 1st mortgage.
By 2005 the home prices had risen dramatically (like you are seeing today) and the borrower qualified for a new 2nd mortgage in the form of a HELOC.
A $56,000 loan was given to the borrower for who knows where the money went, it was all the norm back then to take a loan out to consolidate debt, take a nice Vacation. By 2008 they had fallen seriously behind, and the bank sold this and other non performing loans to my mentor in a bundle.

This bundle had a few hundred loans all bunched together and were sold at a huge discount. Let’s say .07 on the dollar, yes .07 on the dollar. The banks just don’t and won’t go through the bother of doing the work that we are willing to do and in most case are not allowed to do what we can. So this $56,000 loan was purchased for less than $4,000.

I purchased it for .10 on the dollar $5,600 and away I went.

I contacted the borrower and introduced myself, she hired a lawyer to make sure I was legit, the lawyer and I had a nice chat, I told him I could lower the monthly payment, bring the loan current for $2,600 and start accepting $250 per month going forward. I got half of my purchase price back up front and the entire purchase price back the first year.

That was in 2009. As of this writing I am expecting the full remaining balance of $34,200 to get paid off through a refinance in the next few weeks. Over 10 years worth of $250 per month and now a full payoff.
That is the note business from the investment end of it. 
In our next podcast I will be discussing how to work this business with very little money.

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