We all need a higher rate of return than the banks are currently, what better way than Investing in Real Estate ad Business Notes. Here are some ideas that you can employ
1) Invest in yourself
2) Early mortgage payoff
3) Invest in a note
4) Buy from a broker
5) Buy a partial
1) Invest in Yourself
If you think education is expensive, try ignorance! There is no greater dividend that will ever be paid than your return on your investment in education: Provided it is the right education. What is right? It’s education that teaches you how to excel, make money, negotiate, be creative, take calculated risks and strive to get ahead. Education that teaches you how to work for someone else and put in just enough to get by is detrimental. Education from someone who has never left school and faced the real world should always be questioned.
2) Early Payoff on Mortgages
It's a simple mathematical conclusion that if you have money invested at 6% and are paying on a home or rental mortgage at 10%, it doesn't make sense. Yet in many cases, people don't see the scenario clearly. If you have any long-term money invested at less than your home or other mortgage, use the money to reduce the mortgage. What is a little more obscure is that you can make monthly contributions to paying off high-rate loans with a simple phone call to the lender. If you pay an extra $100 each month on a 10% amortized mortgage loan, the $100 goes directly towards principal and pays your home off years earlier. What is your risk? None! Debt reduction
is a guaranteed rate of return.
3) Invest in a note
Investing in discounted mortgages can offer safe rates above 10%. If you know how to do the simple paperwork or have a consultant or team of pros that can do the work for you, it can be a safe, simple process. If you don't have the skills or have an associate that does, contact me
for information on the National Note Franchise office in your area that can help you do the "due diligence" and put together a professional package on the mortgage for a reasonable
fee.
4) Buy from a broker
Many note buyers in the marketplace are brokers who buy a note at one price and sell at another. You may be able to achieve an attractive yield by buying from them or investing with them. Due to a few brokers out there being "ethically disoriented" you must use caution and review
their packages, data and representations carefully. There is a large distinction between investing in already existing mortgages with a discounted mortgage broker and originating new mortgages with a loan broker. The latter carries a greater degree of risk and greater need for verifying the documentation, supporting values and data.
5) Buy a partial
In cases where a note seller needs a small amount of cash, doesn't want to take a large discount or your investment funds are limited, the purchase of a "partial" can be a good option. Buying a partial involves the purchase of less than a full interest in a mortgage. For example, a $10,000 / 10% / 30 year note would have a payment of $87.76 per month. To purchase this note at a 20% yield would cost $5251.87. Buying a partial could be as simple as buying half of the note. Let's say we purchase the first 15 years of payments for $5,000. Our rate of return would be 19.99% on our investment. Partials can be a powerful tool. There are also strategies where you buy the latter portions of notes (Tails).