NoteRehabberese: Learn the Nitty Gritty of Real Estate Investing Lingo

A couple weeks ago we introduced you to the basics of real estate investing lingo – or, as we like to call it, NoteRehabberese 101. Now that you've wrapped your brain around those foundational terms, it's time to dive into some more advanced jargon.

NoteRehabber Learn the Nitty Gritty of Real Estate Investing Lingo

As you build up your real estate investing career, the conversations and deals you'll be part of will involve more complex factors. One of the most challenging phases of non-performing note investing is getting the note re-performing and deciding on a lucrative exit strategy.

Today, we'll introduce you to a handful of terms specific to the most common scenarios you'll navigate in the real estate investing world.

Challenging Scenarios of Non-Performing Notes

When working with non-performing notes in particular, there will be times when acquiring an asset and getting it re-performing are a challenge. Ideally, there will be a scenario where you can find a win-win-win option for the borrower, your investors, and yourself.

However, there are times when you'll have to work within the circumstances handed to you and settle on a less-than-favorable option. Here are the nitty gritty details on these common real estate investing terms.


When you acquire a non-performing note in which the borrower isn't cooperating, isn't responding to your communication, or simply isn't able to pay anything on their loan, foreclosure may be your only option. A foreclosure is damaging to credit and a borrower's financial reputation, which is why – whenever possible – we at NoteRehabber try to work with the borrower to find an alternate solution.

Simply put, a foreclosure is when a borrower hasn't paid their bills and, as a result, the bank or lender will provide the documented evidence in court to claim rights to the property.

A foreclosure, being a substantial legal process, will require a lawyer and a lengthy paper trail. The process can be extensive and can take a few months or even years to conclude.

However, in the end, if you go with foreclosure, you will end up with an asset that you can then sell, flip, or otherwise exit from and recoup your investment.


An eviction occurs when the owner of the property desires to remove an individual, such as a tenant, from the property. When an individual is removed from the property, most likely he or she will have to resolve the issue by going through the county, sheriff, or local government.

Depending on the details of the paperwork, a Contract For Deed can result in an eviction instead of a foreclosure. This can mean a shorter timeline for the property owner/lender to reclaim their collateral. But watch out, depending on the state law a CFD can "turn into" or "be treated as" a mortgage, and will have to follow foreclosure rules. Be sure to consult local legal council on each situation.

At NoteRehabber, our goal is to get notes re-performing before they fall into foreclosure or eviction. By getting the notes re-performing, the lender won't lose money on their loan and the borrower won't suffer long-term credit damage or serious financial consequences.

That's why we tend to view foreclosure and eviction as 'last ditch efforts' when creating our exit strategy.

"Everybody Wins" Real Estate Investing Options

Contrary to foreclosure and eviction, which can leave borrowers and tenants with dark marks on their credit histories, there are several other strategies for dealing with an asset and getting it re-performing that result in that win-win-win we're always aiming for.

Deed in Lieu or Cash for Keys

A deed in lieu is also known as cash for keys, meaning that a borrower has signed a document agreeing to turn over their rights to a property in assurance that they will not be pursued for the debt on the mortgage.

NoteRehabber Learn the Nitty Gritty of Real Estate Investing Lingo

A deed in lieu is one way for a borrower to get out from under the debt of a property they can't pay on without going through the foreclosure process. If a borrower isn't able to agree to a plan to reinstate their loan, consider a cash for keys strategy.

Loan Mod

A loan mod (short for modification) is the changing of rules on a mortgage. If an original agreement was made on the basis of a payment and an interest rate (also known as a P&I), changes can be made to reduce the monthly payment or the interest rate so that the loan becomes more feasible for the borrower to continue payment.

A loan mod is one opportunity for the borrower to stay at the property if they can't afford to make their original payment amounts, without having to go through foreclosure.

Trial Payment Plan

A trial payment plan and a loan mod go hand-in-hand. Once you've acquired an asset, you will have more flexibility than traditional banks to help a borrower get back on track with their payments. Many real estate investing professionals who aim to get non-performing notes re-performing offer borrowers a revised contract with different payment terms.

Under this new deal, you may want to instate a trial payment plan. A trial payment plan is a testing phase during which time the borrower makes payments and proves his or her reliability prior to fully modifying the contract. If the borrower is able to maintain consistent payments over about 6 months, you can consider that asset re-performing.

Have more in-depth questions on any of these scenarios? Ask us in the comments below.

If you want more information like this, subscribe to our YouTube channel to grow your NoteRehabberese vocabulary.

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