Guns Up, real estate investors! In this episode of The Note Closers Show, Scott Carson heads up to Lubbock, Texas, to analyze a unique non-performing first-lien note case study. This occupied 3-bedroom, 2-bathroom home features significant recent exterior rehab (new roof, windows, and paint), 33% equity, and a surprisingly low $158/month principal and interest payment that has gone unpaid for nearly two years!
Scott walks through the exact due diligence, valuation metrics, and multiple exit strategies—showing you how to navigate low interest rates, foreclosure options, and REO sales to target returns ranging from 25% to over 67%!
Detailed Episode Highlights
- Property & Location: 3-bed, 2-bath, 1,881 sq. ft. single-family home (built in 1950) on a 7,900 sq. ft. lot in Lubbock, Texas.
- Loan Details & Peculiarities: Non-performing first lien with an estimated legal balance of $85,600 and a 3.25% interest rate. The original 2005 loan was $40,000, resulting in an unusually low $158.39/month payment.
- Property Condition & Transition: Recent Zillow imagery reveals major exterior upgrades (new roof, single-tone paint, new windows) compared to older bank BPOs from 2022 ($88K value). Current Zestimate sits conservatively at $129,000.
- Occupancy & Title Research: Tax rolls and deed records show the property was transferred from the original borrower to his daughter, who currently occupies the home.
- Exit Strategy #1 (Reinstatement Risk): Why requiring full reinstatement (36 months of payments in year 1) is mandatory—and why a low $158/month payment yields an unappealing 2.77% long-term return without foreclosure pressure.
- Exit Strategy #2 (Foreclosure Auction): Bidding at 80% of legal balance ($68,500) offers a $17,000 gross profit if sold at auction (~25% annualized ROI or 100% simple return on a 90-day timeline).
- Exit Strategy #3 (REO Retain & Retail Sale): Foreclosing and taking the property back to sell at $122,000 net proceeds yields a potential $41,300 profit (67%+ ROI).
- Key Risk Factors: Managing bankruptcy risks, unknown interior conditions, and evaluating servicing notes/right-party contacts.
The Next Step
Ready to evaluate non-performing notes, execute proper due diligence, and structure winning bids? Reach out to Scott directly to submit offers, discuss strategy, or partner up on upcoming deals!
📩 Email Scott: scott@weclosenotes.com
📅 Book a Call: talkwithscottcarson.com
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