There was an article in the WSJ last November on how it's becoming increasingly popular for individuals to buy non-performing loans on single family homes. I'm just curious as to what you guys think about it? Would any of you buy a non-performing loan using your own personal cash?
It was an interesting read, but I got a lot of "get rich quick" vibes from the type of people involved with it.
Very interesting read. My initial thoughts are that the risk is too high to invest my personal cash. Mostly because if that first loan goes south, my nest egg is wiped. However, I do see this as a sustainable business model.
I'd be interested in talking to folks at some of those firms about how they view risk. I'm assuming there's a collateral airball with most of these loans - do they come to be character loans? how often is foreclosure used? in that respect, do they fix up the property and resell? Lots of different avenues.
There are definitely good ways to invest in it but there are a lot of those "get rich quick" schemes out there. I worked as a residential broker throughout college and had/ have a good client of mine who does this in upstate NY. Adjusted for losses, he (is young 20's) and his dad average 12% returns on their portfolio of distressed debt. This definitely isn't easy cash money make it rain hit up the club. But 12% is nothing to turn up your nose at. These guys are very sophisticated too, so keep that in mind.
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