Are you tired of the same old investment methods? Are you looking for a way to diversify your portfolio and earn higher returns? Look no further than note investing! Note investing involves purchasing mortgage notes from lenders and earning a profit from the interest paid by the borrower. This innovative investment method is taking the financial world by storm and for good reason.
We know that investing can be an overwhelming and daunting task, especially for new investors who are just starting out. With so many options available, it can be difficult to decide which investment strategy is the right one for you.
In this article, we’ll be sharing the top three reasons why note investing is the future of investing and why you should consider it as part of your investment portfolio.
Reason 1: High Returns
Let’s start with the most attractive aspect of note investing: high returns. Traditional investments like stocks and bonds typically offer returns of around 5-8% annually. However, with note investing, you can potentially earn much higher returns, ranging from 12-20% or more.
One of the biggest advantages of note investing is the ability to buy distressed notes, which are mortgages that are in default. These notes can be purchased at a steep discount, often 50-70% of the original balance, and can be resold for a profit.
While this strategy does come with risks, such as the possibility of foreclosure or the homeowner paying off the loan before it can be sold, there are ways to mitigate these risks.
For example, one strategy is to invest in performing notes, which are mortgages that are being paid on time. While the returns may be slightly lower than distressed notes, the risks are also lower, making it a great option for those new to note investing.
To mitigate this risk, it’s important to do your due diligence before investing in a note. This includes researching the borrower’s credit history, property value, and other relevant factors. It’s also a good idea to diversify your note investments by investing in multiple loans with different risk profiles.
We remember when we first started note investing, we were hesitant to take on too much risk. However, we learned that with the right research and diversification, the potential returns can far outweigh the risks involved.
Reason 2: Passive Income
Another great advantage of note investing is the potential for passive income. With traditional investments, you may need to constantly buy and sell stocks or bonds to earn a profit. With note investing, once you purchase a note, you can sit back and collect monthly payments from the homeowner, generating a steady stream of passive income.
When you purchase a mortgage note, you become the lender and receive interest payments from the borrower. This means that once you invest in a note, you can sit back and watch your money grow without the need for constant management or monitoring.
In fact, we had one client who invested in a performing note and was able to earn passive income every month, which he used to pay off his mortgage. It was like having a tenant who never caused any problems and always paid rent on time!
Passive income is especially important for investors who are looking to create a steady stream of income for their retirement years.
By investing in mortgage notes, you can create a reliable source of income that can help supplement your retirement savings.
We have another associate who recently retired and was looking for ways to create passive income.After some research, he started investing in mortgage notes and was pleasantly surprised by the steady stream of income he received each month.
Reason 3: Low Barrier to Entry
Lastly, note investing has a low barrier to entry. Unlike other investment methods like real estate or stocks, note investing doesn’t require a large amount of capital upfront. You can start with as little as a few thousand dollars and still see returns on your investment.
Additionally, note investing doesn’t require a lot of specialized knowledge or experience. With the right research and due diligence, anyone can invest in mortgage notes and see a return on their investment.
When we first started note investing, we were surprised by how accessible it was. We’d had always assumed that investing required a lot of capital and specialized knowledge, but note investing proved us wrong.
Bottom line: note investing is an innovative investment method that offers high returns, passive income, and a low barrier to entry. While it does come with risks, there are ways to mitigate those risks and earn a healthy profit. If you’re looking to diversify your investment portfolio and try something new, note investing may be just the thing you need to help you achieve your financial goals.
Remember, it’s important to do your research and educate yourself before diving into any investment method. Consult with an expert (you can contact us) and seek out resources to help you make informed decisions. With the right strategies and a little bit of luck, note investing can be a great addition to your investment portfolio.
You May Also Want to See:
- CFD vs. Mortgage/Deed of Trust – What’s the Difference?
- Unlocking Cash Flow: Harness Mortgage Note Investing and Be Your Own Bank
- Demystifying Mortgage Note Investing: How to Get Started Now!
- 8 Ways to Make Money with Real Estate Note Investing
- Struggling Wholesalers to Thriving Note Investors – Our Story
