If you are interested in getting significant returns that are secured by the real estate, it's time you venture into buying mortgage notes. Well, the reason is simple; getting a savings account or money market account in the bank will not pay you a big sum.
If you are thinking of choosing the traditional way of putting all your money in the retirement account and hope that it'll be beneficial in the future, you are pretty much wrong as it does not add big numbers in your account. So, you think, what's the solution now? The answer is simple, never be average. If you actually have a goal for your retirement, like it may be that you wish to have enough money to spend on the things you really want, but traditional investing will not be able to fulfill them.
According to the investors today, an investment where you are backed by secured assets and get solid returns is something that is preferable, and note buying is one such investment.
Don't Think About The Risks
Wherever you invest your money, there will always be a risk, whether it is a traditional investment or a different one. But the confusing risk with a non-traditional investment is something you should not do. Because even if you aren't investing your money in a safer place, you can still minimize the risks involved. Besides, the returns you get are quite higher than any regular investment.
So isn't it better if you invest in something where you can determine the risk level and what returns you will get? Although it seems unrealistic, purchasing private mortgage notes gives you these benefits.
You Get a Lot of Assets
As an investor in real estate, when the market is right, you get to enjoy the benefit of the increase in value when you get paid the monthly rent checks by the tenant who covers the mortgage payment.
But there are also some drawbacks when you own real estate:
- The first thing that might cross your mind is that if the property's value will increase or not, and what if it decreases instead?
- You might get constant calls from your tenant who needs something done, like a roof leak repair, clogged toilet, broken window, and so on...
- Another thing is that you need to find properties that cash flow. Besides, you need to ask for an amount of rent that covers taxes, insurance, mortgage payment, and more. This gets quite difficult.
But, when you have a note, you are the bank, and you will be the one receiving payments. Moreover, if anything at the property needs to be repaired, the owner has to get it done. And if a situation of non-payment arises, you have all the rights to foreclose the property.
So, the various benefits you get when you invest in notes include:
- You earn good returns as compared to any traditional investment, and the great thing is, you are covered up by a traditional investment - the real estate
- You can foreclose the property then resell it, or you can even create another note
- You can lower your risk by investing in just a little part of the note
- You can also purchase the note in a self-directed IRA where it can be tax-deferred or maybe even tax-free
So, to start buying notes, you can first begin by brokering a few notes in order to learn the underwriting and closing processes that note buyers use. Besides, you can ask for referrals as well.