Mortgage notes / Alternative InvestmentS
Mortgage note investing is a form of passive ownership in physical real estate. As a mortgage note investor, you act as the Bank by making a real estate loan to the borrower. In return, the borrower promises to repay the loan back plus interest. The borrower uses their property and their equity in that property as collateral to secure their promise to repay the loan. In case of mortgage default, you have the physical real estate as a backstop against loss. When you purchase a mortgage note, you are effectively "renting your money" to a borrower who will either pay you back plus a rental fee(aka interest income) OR you will get to own that borrower's house for significantly less than market value.
Generally, when compared with another form of real estate investing, mortgage note investments have the advantages as follow:
- Investment risk could be easily managed through the debt-equity ratio;
- Mortgage notes are relatively liquid and can be resold for a lump sum of cash at any time and with extremely low transaction costs;
- The investments are very simple to own with the assistance of professional management; and
- Mortgage notes are excellent investment vehicles for self-directed IRA accounts.
If you have an interest in learning more about mortgage note investments or becoming a notes investor, please contact us as we have business partners that specialize in providing management and advisory services to real estate notes investors
