For investors considering distressed mortgage credit as an investment strategy, here are three key operational focal points to ensure safety, soundness and structured income.

Due Diligence

Perform comprehensive due diligence on each potential investment opportunity. Assess the property’s physical condition, legal and title status, potential liens, and any other relevant factors. Evaluate the cost of repairs or renovations required to bring the property to market standards in addition to any legal and title curative measures that are needed.

Value-Add Strategies

Create a detailed business plan outlining value-add exit strategies to unlock the distressed credit unrealized gains. This could involve modifying the terms of the loan, foreclosing on the property, trading the mortgage, or offering “cash-for-keys”. Aim to increase cash flow income, attract higher-quality borrowers, or explore seller-financing options that align with market demands.

Exit Strategy Planning

Develop a well-defined exit strategy that outlines the intended timeline and approach for trading, modifying, or foreclosing on the underlying properties. Continuously monitor conditions in the real estate and capital markets to identify optimal exit opportunities to safely maximize returns for investors.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named representative, broker - dealer, state - or SEC - registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

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