Banks are in the business of loaning money on which they can collect interest. However, if the mortgage notes that are in their possession are not being paid by the borrowers who own these properties, the banks now possess a non-performing asset. In the eyes of the lending institution, this type of note should be sold because it is not generating any revenue for the bank and they are losing money with each passing month that a borrower does not make their mortgage payment. If you know how to speak effectively with mortgage lenders, are willing to spend lots of time on the phone and desire to own real estate notes, you can buy these investments directly from the bank.
Locate homes that are owned by a bank. You can find houses such as this by using an online service (see References) that focuses on this aspect of real estate. Spend your time searching for property in your city, so you can actually see the locations you are interested in pursuing.
Contact the bank who holds the note. Ask the person with whom you speak what department handles the purchase of mortgage notes. Let the person you reach know you are a capable buyer who wants to purchase the note of the property in foreclosure.
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Decide on the price you will pay for the financial instrument. You can determine how much you want to pay by looking at the prices of similar properties in the same area. This data can be obtained at no cost via the Internet. Once you have an idea of what the property is worth, let the bank know what you plan to offer on the note. Start by offering 70 percent less than what you believe it is worth, so you have more room to raise your offer in the future. Be sure to have the cash you need to buy the note, or get a loan to make the purchase, so there will be no delay in the buying process.
Keep making offers. Once you find a bank who accepts your terms and have purchased the property, you can evict anyone living in the house by initiating the eviction process. You should work with a company who are experts at this process, so you do not have to deal with this on your own.