Best Deal Buying A Discounted Note

The best deal I found on a discounted second mortgage happened one day when I was out driving around and noticed a for sale sign on a house that was in bad shape.

I called the real estate agent and was told by the agent the house was sold and it would be closing in a couple days.  I checked the county recorders office and found out that the property was scheduled to be sold at a trustee’s sale in 5 days, I also copied the information on the lenders.

The deal started looking more interesting to me because there was some good money in it, so I called the real estate agent back to talk a little more, during our conversation I found out that the lender who had the second deed of trust had not contacted the escrow company about the sale.

The escrow company is really not in the business of tracking people down, they mail one letter to the address they have and they are done.

I put a little more effort into contacting the lender and found out they knew about the foreclosure sale but since they were out of state they didn’t know about the property being listed with a real estate agent who had a buyer about ready to close the deal.

The guy who had the second mortgage was sure he was going to lose everything at the trustee’s sale, he begged me to make him an offer to buy his note, he started out offering me a 50% discount and then the next sentence dropped the price another 25%.  

I asked him if he was sure he wanted to sell his note at a 75% discount.  He said that’s what he wanted to do, so I bought the note from him and 4 days later got paid off on the full amount plus interest.

When I quadruple my money in 4 days I always like to figure out the annualized rate of return but my calculator does not go that high.