Are you looking at purchasing real estate notes in Michigan?

First off, welcome to the club! There are some wonderful advantages to investing in notes.

As with any investment, doing your homework can save you big down the road.

Not only will it help minimize risk, but it also leads to more profitable note purchases. It’s all about understanding what type of note you’re in the market for, understanding Michigan’s Real Estate laws and performing your due diligence.

So, here are a few things you should know before purchasing seller-financed notes in Michigan.

Michigan Real Estate and Foreclosure Laws

Buying Real Estate in MichiganPurchasing a real estate note is a legal transaction. While it may not seem as official as buying a home through a bank, the agreement and sale are just as binding. Also, it needs to follow all the same rules and laws.

To start, Michigan is a Deed of Trust state. However, they also use the Contract for Deed on many seller-financed transactions.

With a Deed of Trust the title is first transferred from the Seller to the Buyer with a Deed. The buyer (or borrower) then signs a Deed of Trust back to the seller as the lender. The Deed of Trust involves a third-party “Trustee” who holds legal title to the property as security until the note is paid.

With a Contract for Deed transaction, the seller retains the legal or fee simple title with the Deed being delivered to the buyer upon payment in full.

Michigan Foreclosure Laws

The foreclosure process is generally more straightforward and faster with a Deed of Trust or Contract for Deed when compared to the average Mortgage agreement that requires judicial foreclosure in other states.

In Michigan, foreclosures are not legally required to happen within the court system, with most being handled outside of the courts.

However, don’t assume that just because Michigan is a non-judicial foreclosure state that the process is simple and straightforward.

On average, foreclosures still take around eight months and have strict procedural guidelines including a redemption period. Source: RealtyTrac at

Understanding What You’re Buying

When it comes to real estate notes, not all of them are created equal.

If it’s your first time purchasing a real estate note, its best to find a performing note that has a history of on-time payments.

Although a ‘performing’ note is no guarantee of future payments being made on time, it is a leg up from purchasing a delinquent or a re-performing note.

Once you are well-versed in the real estate investing laws and the community, you can begin to branch out.

While non-performing notes have a history of missed payments and are delinquent, they can be bought at a more significant discount meaning more room for profit.

Doing Your Homework

No one enjoys homework, but it’s a necessary part of purchasing real estate notes.

Before buying real estate notes in Michigan or any state, do your due diligence.

Take the time to find out all of the agreed upon terms, deciding if they fit your required profit margin.

Review the transaction with your attorney and tax advisor.

Take a moment to learn more about the buyer.

Have they made steady, on-time payments? Have they recently lost their job or perhaps came into a new job making more money and potentially increasing the chances of an early payoff?

Doing your homework is an essential part of investing in real estate notes.

So, ready to start buying notes? We invite you to view our inventory of Notes For Sale in Michigan and other Midwestern states. Still, have a few questions? Contact us today!