Non performing loans aren't the most common way to invest in real estate, but these loans can be an effective way to diversify a real estate portfolio. Here are several ways to capitalize on non performing loan investments.

Resell with the Loan in Place

In some cases, capitalizing on a non performing loan is as simple as buying and reselling the property. 

You can often buy a property that's tied to a non performing loan at a discount because the loan on the property isn't currently being paid. After you purchase a discounted property, you may be able to find another buyer who'll purchase the same property with the same loan at a smaller discount than you did.

While this isn't the most common way to make money with a non performing loan investment, it's the easiest way to gain a positive return on this type of investment. Should another buyer come along and offer you more than you paid, anything above what you paid for the property is a positive return that you need to do virtually no work for.

Flip the Property with Improvements

A more common way to make a relatively quick profit on a property that's tied to a non performing loan is to fix and flip the property. Investors who fix and flip properties purchase their properties at a discount, make improvements or repairs to the properties, and then resell them at a higher price. 

Properties that are financed through non performing loans are ideal candidates for this type of investment, because you can often get a large discount both on account of a property's condition and because of the status of its loan. The more you can get discounted, the more you can make on a property.

Procure the Property from the Owner

For a longer-term investment, you may be able to purchase a property that's financed through a non performing loan directly from the current owner. If the owner is so far behind on payments that they're facing foreclosure, selling to you even at a steep discount might be better for them than going through the foreclosure process.

Should you acquire a property directly from the owner, you could have the property for a while. Be prepared to take care of the property and rent it out to tenants. Renting is one of the most common ways to make money after procurement from an owner.

For further questions regarding non performing loans reach out to a professional company like DeNovus Capital.