When you take a loan, the bank can “sell” your loan to an investor. What does that process look like, and why would an investor want to buy loans?
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Imagine that you own a rental home that you pay a mortgage on, but still profit $500/mo from the rent.
You have an opportunity to buy a rental property that could earn you $1500/mo. However, in order to do that, you will need to sell your first rental property to use the money/capital from that large one-time transaction to reinvest into something with a higher yield.
That’s basically what banks do with loans.
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