07 Sep Note Buying Benefits Compare to Other Investments
Note Buying as Alternative Investment Opportunity
Note buying of any type such as notes for a mortgage, business, the mobile home is another alternative investment opportunity in real estate. There are plenty of notes you can find in the market. The real estate market is already difficult and lots of investors are looking forward to a new opportunity that can earn above the market.
Note buying is the process of purchasing an existing real estate that is secured by trust deeds or promissory note. Why is note buying beneficial than the other real estate investments? Why do some private lenders or individual invests in this market?
Reasons for Note Buying
Reason 1: There is control. Notes are easier to manage than managing a real property. They tend to be more flexible where a note can turn into flowing cash. Location is not a problem also. Unlike managing a property where you have to go and see it for yourself. But with notes, there is less liability and if you don’t want to hold real estate you can always turn it into a note. It tends to avoid dealing with tenants and contractors.
Reason 2: You have collateral. Like what they say “It is better to have a bad loan with equity than having bad tenants”. With a note, you are secured to have a right to own the property until the tenants have paid their dues. The equity protects the note you are in possession. Notes that have 30% equity are the best notes to invest and highly collateralized possession.
Reason 3: There is profit. The big investment about notes is that they can be purchased at a discounted price. When you purchased discounted notes, you make more money from the value than what you paid. Most discounts range from 8% to 18%. You make more money from buying and then you make more when you restore the note. Aside from that, there is less competition in this market. Only a few investors are up to note buying. This means that there is a wide range of source yet less competition.
Reason 4: It’s market versatility. You can do anything with a note than with a real property. You can do a wholesale of note, can turn non-performing into performing, you can sell the whole note or even just sell the partial. In the end, you can make money whatever you want.
There are other reasons and benefits why note buying is a good investment. For people who are into real estate, this market can be an additional cash flow to your business.