Why would I invest in non-performing loans?
Due to the overwhelming number of delinquent loans, investing in non-performing loans is becoming easier to accomplish. Some lenders, for example, prefer to sell notes as an option to foreclosure. They’d rather unload the bad debt, and give their problem to someone else. That could result in a price reduction.
Also enticing is the fact that it’s much safer to hold a note than own a property. For one thing, the purchase price on a note is usually less than that of an REO or the house itself. The liability as a note holder is much less than of a homeowner. And there may be certain tax benefits to owning notes versus real estate.