The "Fix and Flip" of Note Investing (Real Numbers)

Bought a non-performing second lien for $15,750.

The borrower had stopped paying the second mortgage — but was still current on the first. That's a signal most investors miss. If someone is prioritizing their senior debt, they have income. They want to keep the home. They just need terms they can handle.

Three questions:

- What happened?

- Where are you now?

- What do you want to do?

The borrower wanted to stay. Modified the loan to $442/month — affordable alongside the first. Collected payments, seasoned the note, then sold the re-performing asset to a passive cash-flow investor for $30,033.

121% IRR.

Here's what to notice: the investor never needed the borrower to come up with a lump sum. Most NPL borrowers don't have $30K sitting in a bank account. But they do have monthly income. The modification-to-sale workflow meets borrowers where they actually are — and it's the most repeatable NPL strategy because of it.

If you understand how to price a re-performing note before you even modify the loan, you can work backward and know your exit price at the time of purchase.

Full numbers and breakdown:

https://fixnotes.com/blog/case-study-loan-mod-121-irr

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The "Fix and Flip" of Note Investing (Real Numbers)