By now, you know what a Real Estate Baked Note is and what a note purchase could look like. Well, if you’ve read Part I and Part II of our Ultimate Guide to Notes Series you do. 

Haven’t read Parts I and II? I probably would have done the same thing. Lucky for you, this final part can stand alone. 

Sometimes knowing the WHY helps us make the decision to go deeper into the HOW and WHAT. Thus, starting with Part III: Why Should I Put My Money In Notes may be just the right spot for you. Why even continue learning about this real estate investing strategy if it won’t fit into your own WHY? 

The WHY of notes is how we landed here. There are so many options for getting money working through real estate investing. It can be overwhelming. We found it essential to look at each different asset class as well as our own goals and values to determine the best vehicle for getting our money working harder. 

It’s hard to beat the list below. And that is just the beginning, or so we’ve found. 

In case you do want to go back and get more of the basics down, here is the breakdown of the Ultimate Guide to Real Estate Secured Notes series:

1. What is a note? (Part I)
2. How does a note purchase work (plus and example)? (Part II)
3. Why should I put my money in a note?

Why Should You Put Money Into Real Estate Backed Notes?

Okay, now that you’ve got a decent understanding of how real estate notes work, let’s talk about what’s in it for you. There are a number of reasons that you may decide to partner on a note deal.

Here are a few of the top reasons:

• You want to invest in real estate but don’t have the time or interest in being a landlord.
• You want to invest in physical assets (as opposed to paper assets, like stocks).
• You want to invest in something that’s more stable than the stock market.
• You want to build multiple streams of income.
• You want cashflow.
• You want higher returns than the stock market.
• You don’t want to be a landlord.
• You don’t want to build your own local teams of realtors, property managers, lenders and construction in different markets across the country.
• You don’t want to tie your money up for more than 5 years.
• You want to invest with your retirement funds.
• You want your money to make a difference in local communities.

Lets distill this into a few bigger ideas.

Your Time

Note partnerships just won’t take much of your time. And we know you could use more time. Time to go for a bike ride, time to cook healthy meals, time to be present with your friends and family. Who doesn’t need that? 

Our Note Partnership structure is meant to clearly provide documentation for every aspect of the purchase and management of each Note. No mysterious actions behind a curtain. However, you don’t have to do any of the leg work. You are able to contribute your input at key decision points as you desire. 

This semi-passive/semi-active structure helps our partners better understand the wealth building potential in Notes without taking more of their time.

If you are investing to one day have the freedom to quit your job or spend your time doing what you love, then you are looking for more time. Why not have it right away? No need to suffer through years of late-night landlording duties to grow your money in real estate.

Your Returns

Simply put, Notes crack the whip on your dollar bills harder than many other options. 

Risk is heavily mitigated at the onset of the partnership before an offer is even made. The deep discount we purchase with makes multiple exit strategies viable. Yet, we use conservative projections for returns as if we were going to end up with the property.

But, we aren’t here to get the house.

We love Note Investing because of the potential upside when converting a non-performing note into a performing one (helping a borrower keep their home). 

With higher returns, your money is making money faster. This accelerates your wealth building and puts more money in your passive income pot quicker. 

Your Capital Hold Time

Notes are short- to medium-term investments with a shorter capital hold time than many other real estate investing vehicles. 

Your capital will be working in the note purchase for 1-3 years. We aim to hold notes for 12-18 months, but it is always best to expect the longer time frame. We want to get those returns so you can get your money working again. This is the velocity model of wealth building.

We will also work together to discuss exit strategies and cash flow options that could change the length of hold time. As a partner in the asset, you have the ability to provide input. For instance, we may opt to hold a recently performing note for a few extra months to continue getting monthly cash flow, then sell it.

No Landlording

You’ll never have to screen tenants, manage repairs, or get late night phone calls. Ever.

While the house secures your capital, you never have to lift a finger to manage it. No one calls their bank when the pipes burst. You simply continue to get your monthly payment. 

Since homeowners are making payments to be able to fully own the property, they generally take much better care of a house compared to a renter. We also only purchase notes that are owner-occupied. Insurance also covers any major damage to the securing collateral. 

And although houses lose value with time, we don’t aim to hold the note for the long-term. Thus, our securing collateral rarely goes down in value significantly.

No yard maintenance, snow removal, cleaning gutters, trimming trees, painting walls…on and on and on.

This is real estate investing without ever having to be a landlord. This is “Lien-lording.”

Conclusion

A real estate backed note is a nearly perfect way that a busy professional can put their money to work with a physical asset as collateral, without an excessive commitment of time or mental energy. Not to mention getting incredible returns. 

A Note can satisfy many WHYs of real estate investing. Passive income stream, minimal time commitment, great returns, alternative to the stock market, and even an investment that is making a positive impact on the world 

Learn more by signing up to join our Investor Circle and hop on a call with us to see if a Note Partnership is right for you. We notify our Investor Circle members first when partnership opportunities open up.