This event is about learning the different ways to make money in the default world of real estate. To understand what this event is really about, we first have to ask ourselves the following questions:
What’s so special about being PROACTIVE? What’s so Special About DEFAULT Real Estate Investing?
PROACTIVE; creating or controlling a situation by causing something to happen rather than responding to it after it has happened.…..enterprising, take-charge, energetic, driven, bold, dynamic, motivated, go-ahead.
Webster’s defines “Default” as – loss resulting from failure of a debt to be paid, act of failing to meet a financial obligation, or a failure to pay up.
Here’s an investor’s (really it’s my own) definition of DEFAULT ;
“Default means pressure, and pressure means value, and with value comes an investment opportunity at a discounted entry point.”
Default is a very intriguing concept and can be characterized in a couple of different ways depending upon the asset in question. For example, real property taxes in default are considered to be delinquent. Mortgages in default can sometimes be classified as non-or sub performing. Late credit card default can be described either as delinquent or charged-off depending on the timeframe. It’s important to recognize that default can occur whenever a party owes money (a debt).
Why might creditors consider selling defaulted assets and why would an investor buy them?
A non-performing asset begins to lose value to the creditor as soon as the first payment is missed. The longer the asset goes without payment the more severe the pressure on the creditor.
Companies that lend money for example, are experienced in originating loans. Their entire business model is designed to create as many new loans as possible and to make their customers experience a pleasurable one. Often their collection of delinquent loans is only a footnote in their business plan. My point is here that lenders are expert at loan origination, pricing, underwriting and servicing not collection.
The short answer is that creditors are excellent at originating and horrible at collecting. They would rather spend their time and their resources on what they’re good at.
This opens the door for many default entrepreneurs to take advantage of the pressure and scoop up assets at discounted pricing.