Seems like every time I either turn on the TV or read business articles all I see is that the Market is approaching a correction. To me, that does not mean much as I have not been one that places all my financial eggs in one basket. I like to have multiple streams of investment income when it comes to my financial future. One of those streams that I found 5 years ago was purchasing performing and non-performing mortgages. I can hear you saying…What the heck are you talking about? I can invest in mortgages? Yes, you can just as hedge funds and banks do. Of course, on a smaller scale, and you too can own real estate without all the hassles of being a landlord.
Mortgages A.K.A. notes can be bought directly from banks, credit unions, lenders, and private sellers. To buy directly from banks and credit unions you would have to have established connections. Do not fret, the third option and that is purchasing notes from private sellers works just fine for us average investors. Full disclosure, my Company TruVest sells notes to interested investors. And I am not trying to pitch you at all. I want to share and educate you on a different world that most investors do not know exists outside of the Stock and Bond Markets.
For this post, I just want to introduce you to real estate notes and how they can help you solidify your financial future. Below are some basic here key descriptions:
Real estate notes are also known in the industry as the following:
• Deed of Trust
• Land Contract
• Bond for Title
• Mortgage (Fixed or adjustable, First or second)
• Promissory Note
Typically, lenders refer to real estate notes in the following four distinct categories:
1.Residential Notes — Those obtained by borrower(s) for use as a home or investment
2.Commercial Notes — Those acquired by a business entity to have a location to perform business functions from or investment
3. Performing — The borrower(s) are actively repaying the note within the note’s term and requirements
4. Non-Performing — For whatever reason(s) the borrower(s) have ceased making the note’s required payments.
Mailbox Money or Risk Taker?-My favorite Question
There are several avenues that you can explore. The first question to ask yourself is are you looking for mailbox money or are you a bit more of a risk taker? If you are looking for mailbox money, then you need to be looking at performing notes. If you are bit more of a risk taker and are looking for a more substantial ROI then you want to look at non-performing notes. Each of these investments can return double-digit returns in as little as 6 months. My last statement is solely based upon my experience investing in real estate notes. And I will share some of my deals in my upcoming posts. I am going to leave you here for this post and next week I will be sharing more in-depth on performing notes and a few horror stories of mine from my note investing journey.