DUE DILIGENCE PRACTICE
Note Buying Objective Overview
1. Locate the assets to be acquired. This requires research into the market to determine the most attractive notes and to evaluate the chances of collectability.
2. Efficiently evaluate the potential for collectability. This requires an in-depth analysis of the note, including a thorough review of the borrower’s financial records, credit history, and current employment situation.
3. Pay as little as possible for the note. This requires a review of current market trends, an evaluation of the borrower’s ability to pay back the loan, and a comparison of the note to others of similar quality.
4. Collect the note and its collateral in full. Therefore, a note buyer must have a strategy for collecting payment from the borrower and/or guarantor.
5. Disposition of the collateral to recoup the investment if it goes into default. This usually involves foreclosing and selling the collateral to a third party, auctioning it off, keeping it as a rental, or selling the property using seller-financing so the note becomes viable again.
PERFORMING NOTE DUE DILIGENCE PRACTICE
Module 1: Getting Started
Read and familiarize yourself with the Due Diligence Workbook and download the PDF so you can print out at home and check off the boxes as you go.
Module 2: Performing Notes
Start with the Performing Notes Excel spreadsheet or PDF with links to the Due Diligence Zip Files below:
Performing List Pricing Review Estimate.xlsx 
Performing List Pricing Review Estimate PDF
Module 3: Checklists
Look through the Due Diligence documents for each property and use the checklists provided in the Workbook to make sure they aren’t missing anything
Module 4: Due Diligence Completion
After going through the documents provided for each property and filling out the checklists, determine if they are complete or if they are missing items.
Due Diligence Worksheet Checklists
NON-PERFORMING DUE DILIGENCE PRACTICE
Module 5: Read Pgs 13-19
Read and familiarize yourself with the pages regarding Foreclosure in the Due Diligence Workbook and download the PDF.
Module 6: Performing Notes
Start with the Non-Performing Notes Excel spreadsheet or PDF with links to the Due Diligence Zip Files below: Non-Performing List Pricing Review Estimate.xlsx Non-Performing List Pricing Review Estimate PDF
Module 7: Checklists
Look through the Due Diligence documents for each property and use the checklists provided in the Workbook to make sure they aren’t missing anything
Module 8: Due Diligence Completion
After going through the documents provided for each property and filling out the checklists, determine if they are complete or if they are missing items.
DISPOSITION / EXIT STRATEGY
Part of Due Diligence is figuring out a Disposition Strategy in order to determine if it’s a deal and then how to structure a proper return.