Real Estate & Note Investors

Note and Real Estate Tip,Tricks & Advice

What Is Note Investing

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An unsecured note is corporate debt without attached collateral, typically lasting three to 10 years. The interest rate, face value, maturity and other terms vary. For example, say Company A plans to buy Company B for $20 million. Since Company A has $2 million in cash, it issues $18 million in unsecured notes. Because no collateral is attached to the notes, if the acquisition does not work out and Company A stops making payments, investors may have little compensation if Company A is liquidated. Since an unsecured note is simply backed by a promise to pay, it has a higher interest rate and is riskier than a secured note or a debenture, which is backed by an insurance policy in case the borrower defaults on the loan.

Investors look at note buying as a huge opportunity because they can pick up a secured investment (real estate) for pennies on the dollar. They will receive a very nice return for a long period of time. They also play the odds that most homeowners will sell or refinance within 5 years so they get an early payoff. Not only this, but the homeowner can usually stay in their home which creates a win, win, win for everyone.

Note Investing For Dummies

A convertible note is typically used by an angel investor funding a business without a clear company valuation. An early-stage investor may choose to avoid placing a value on the company to affect the terms under which later investors buy into the business. A convertible note is structured as a loan. The balance automatically converts to equity under terms governed by terms set when a later investor buys equity in the company. For example, an angel investor invests $100,000 in a company using a convertible note. An equity investor invests $1 million for 10% of the company’s shares. The angel investor’s note converts to one-tenth of the equity investor’s claim. The angel investor may receive additional shares to compensate for the extra risk of being an earlier investor.

There is a whole market of mortgage notes out there, that you can simply tap into and start making profit without a significant amount of investment and without many hassles. You need to know a few tricks and tips of the mortgage notes, how to get a discount and low performing note, and how to manage those using simple rules and methods.

Chances are, if you are like many investors that discover notes you may have enjoyed investing in real estate. In a good market you get the benefit of any increase in value while collecting the monthly rent checks from a tenant covering the mortgage payment.

How To Buy Mortgage Notes

When you get a mortgage, you may think that the lender will hold and service your loan until you pay it off or sell your home. That’s often not the case. In today’s market, loans and the rights to service them often are bought and sold. In many cases, the company that you send your payment to is not the company that owns your loan.

There are huge advantages of buying the note vs. doing a short sale even though they are very similar in process. One of the biggest advantages is that the homeowner can stay in their home. Those that have 2nd mortgages are perfect candidates. After the mortgages are discounted, it makes the payments manageable not to mention create equity in a home that previously was upside down or under water. Now the homeowner has the option of selling and making a profit.

Note Investing Software

Once a lender originates a loan, it rarely stays in their possession.  The mortgage note is sold into the secondary market, usually as part of a larger pool of notes.  From there, depending on the performance of the note, it’s usually held by the Buyer of the pool of notes, who either services the notes themselves or subcontracts them out to a Servicer.  A Servicer is a company that’s licensed by the various states to collect on behalf of the Buyer.

Note Investing Books

When you own a note, you are acting like the bank. You are the one receiving the payments. If something needs fixed the owner has to do it.  And like the bank, you also have the right to take the house back in the event of non-payment.

Note For Investing Companies

The first mortgage is the original loan taken out when the house is purchased.  The second mortgage may also be taken out at that time or at a later time as a home equity loan. First and second mortgages are both secured loans secured by your property. However, the second mortgage notes are much less expensive.

How Does Note Investing Work

First and second mortgages are both loans with your house as collateral, but the first mortgage (also called first lien) has the primary claim on the property. It takes precedence over all other subsequent claims (called junior claims).

Note Investing Mentor

Like any investment it pays to learn as much as you can and follow those that have already done it. It’s also a good idea to start by brokering a couple of notes to understand the underwriting and closing process used by other note buyers.

Maybe your goal is for retirement income. If so, you can purchase a note within a self-directed IRA! That way the monthly note payments and interest earned can stay in the retirement account tax deferred or even tax-free with a self-directed Roth IRA.

The second mortgage is what the banks describe as a home equity loan. This allows a homeowner to tap into the home equity to borrow money rather than taking out a personal loan, and use it for home renovation or business capital and such.

How To Make Money Note Investing

Promissory note is the deed of agreement you have with your bank when you take out a home loan. By signing this contract, you promise to the bank that you will repay the loan according to the terms and conditions mentioned in the agreement. The bank will hold this document until you pay back the borrowed amount with interest in full.

Note Investing Education

The mortgage note is signed to provide evidence and security for the loan, and it describes the terms and conditions under which the money has to be repaid. This legal document contains standard covenants between the lender and borrower. The lender will also hold this document until the loan is fully paid off. Once the loan is paid, the lender will record a release of mortgage or a re-conveyance of deed.

What Is Real Estate Note Investing

Short sales take a very long time. This is an equity sale so the process is very quick and it does not harm the homeowners credit like a short sale would. In fact, the homeowner doesn’t even need to be delinquent. We’ve settled 2nd mortgages that were not delinquent. We also negotiate release of lien and liability to protect the homeowner from deficiency issues that a short sale may not protect.

Note Investing In Real Estate

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Note investors should make sure the borrower has appropriate insurance for the collateral and that the note investor is listed as the Mortgagee on the Evidence of Insurance certificate issued by the insurance company.  When listed as a Mortgagee on the insurance policy, the insurance company knows to issue a check to both the Mortgagee and the Borrower.   In addition, if the policy is changed or canceled, the Mortagee is notified and can take corrective action.

Note Investing Software

The first mortgage is the original loan taken out when the house is purchased.  The second mortgage may also be taken out at that time or at a later time as a home equity loan. First and second mortgages are both secured loans secured by your property. However, the second mortgage notes are much less expensive.

To start investing in mortgage notes, you need to understand what mortgage notes are, how to find them and how to understand contracts. All these processes are easy to learn; anyone can do them, doesn’t require a whole lot of investment and are relatively risk free. Interested?

There is a whole market of mortgage notes out there, that you can simply tap into and start making profit without a significant amount of investment and without many hassles. You need to know a few tricks and tips of the mortgage notes, how to get a discount and low performing note, and how to manage those using simple rules and methods.

The mortgage note is signed to provide evidence and security for the loan, and it describes the terms and conditions under which the money has to be repaid. This legal document contains standard covenants between the lender and borrower. The lender will also hold this document until the loan is fully paid off. Once the loan is paid, the lender will record a release of mortgage or a re-conveyance of deed.

How Does Note Investing Work

Once a lender originates a loan, it rarely stays in their possession.  The mortgage note is sold into the secondary market, usually as part of a larger pool of notes.  From there, depending on the performance of the note, it’s usually held by the Buyer of the pool of notes, who either services the notes themselves or subcontracts them out to a Servicer.  A Servicer is a company that’s licensed by the various states to collect on behalf of the Buyer.

Note Investing Guide

The second mortgage is what the banks describe as a home equity loan. This allows a homeowner to tap into the home equity to borrow money rather than taking out a personal loan, and use it for home renovation or business capital and such.

Note Investing Education

Notes are not nearly as easy to find as real estate investments.     Investors can look to buy notes directly on a note exchange such as LoanMLS.com, or you may choose to work with professional hard money lenders (a.k.a. private money lenders) specializing in note investments.      Education about investing in notes and investment opportunities may be found at the PrivateMoneyLendingGuide.com

Maybe your goal is for retirement income. If so, you can purchase a note within a self-directed IRA! That way the monthly note payments and interest earned can stay in the retirement account tax deferred or even tax-free with a self-directed Roth IRA.

In purchasing real estate, there is typically a purchase agreement and a Deed.   The purchase agreement details the terms of the purchase and the deed is recorded to put the public on notice of the new owner, and that the transaction closed.  In a note purchase, there is also a purchase and sale agreement which spells out the terms of the note purchase, but instead of a Deed, the instrument that is recorded is called an Assignment.   The previous note holder is assigning the beneficial interest of the note to the new note owner.

Now if the borrower defaults on the loan and does not pay the due debts, then the property can be sold to satisfy the debt. In such case, first mortgage has the primary claim on a property and will be paid first.

Leverage is relatively easy to obtain on real estate and is one of the driving forces behind many investors’ desire to own the asset as an investment.   Leverage gives the owner the ability to enhance (or lever) the financial return.  For example, if an investor purchases a $300,000 single family home and borrowers $210,000, the amount of equity invested is $90,000.  If the property appreciates $20,000, the investor, would earn 23% on his equity ($20,000 / $90,000) from the appreciation[1].     If this same investor did not apply leverage against the real estate, the return would be $20,000/ $300,000 for a 7% return on equity.   In this example, the leverage applied to the real estate (e.g. the $200,000 loan) enabled the investor to achieve a 23% return vs. a 7% return.

Note Investing Seminars

Note investors manage their borrowers, and real estate owners manage tenants.   Both tasks can be outsourced.   Note investors may outsource the collection tasks to a note servicing company just as real estate owners can outsource rent collection and upkeep to a property management company.

Like any investment it pays to learn as much as you can and follow those that have already done it. It’s also a good idea to start by brokering a couple of notes to understand the underwriting and closing process used by other note buyers.

The old adage of real estate, “location, location, location” also applies to notes, although it may be more appropriate to say, “collateral, collateral, collateral.”    Value the underlying collateral of your note investment as if you will own the property (because you just might).    If possible, get an independent interior appraisal, visit or drive by the property.

Note Investing Training

Chances are, if you are like many investors that discover notes you may have enjoyed investing in real estate. In a good market you get the benefit of any increase in value while collecting the monthly rent checks from a tenant covering the mortgage payment.

What Is Note Investing

But people often confuse “risk” with “non-traditional” investing. In other words, just because you’re not putting money in a FDIC insured savings does not mean you can’t minimize the risk of an alternative asset – with an even bigger yield on your investment.

Note Investing Mentor

For every note created by The Note Factory we send out a Note Summary which presents the investor/note buyer with a clean and simple outline of the important terms on the note. If you are interested in the note simply reply to the email ([email protected]) to place a no obligation hold on it.

Note Investing 101

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Once a lender originates a loan, it rarely stays in their possession.  The mortgage note is sold into the secondary market, usually as part of a larger pool of notes.  From there, depending on the performance of the note, it’s usually held by the Buyer of the pool of notes, who either services the notes themselves or subcontracts them out to a Servicer.  A Servicer is a company that’s licensed by the various states to collect on behalf of the Buyer.

First and second mortgages are both loans with your house as collateral, but the first mortgage (also called first lien) has the primary claim on the property. It takes precedence over all other subsequent claims (called junior claims).

Investing 101

I’m not the person who will tell you that you have a low chance of beating the stock market benchmarks by yourself because you can, as I’ve done over the years. I’m the person to tell you though that even if you can do it, you should most likely just stick with index funds. For one thing, you probably have a real job where you should focus your energy in because beating the market takes a lot of time out of every single day and energy out of you. Sure, you might be missing an opportunity on the investment end by going with low cost index funds but when you can concentrate more on your family and career, you get so much more.

How Does Note Investing Work

And finally, where should you actually put your money to work once you know what to invest in? Most people talk about the types of investments but not many people will talk about the companies (brokerage firms) that help you buy and sell equities. Here are a few reviews of popular stock brokers where you not only can read what I think, but what many others think of the company too.

note investing seminars

Want to give the tools a test drive? Take a few minutes and simply sign up for free here. While you are in their platform, remember to check out their nifty 401K Fee Analyzer that will show you whether you are paying too much in fees, as well as an Investment Checkup tool to help determine whether your asset allocation fits your risk profile. For those trying to build wealth, Personal Capital is worth a look. You can thank me later.

Note Investing Training

Now if the borrower defaults on the loan and does not pay the due debts, then the property can be sold to satisfy the debt. In such case, first mortgage has the primary claim on a property and will be paid first.

There is a whole market of mortgage notes out there, that you can simply tap into and start making profit without a significant amount of investment and without many hassles. You need to know a few tricks and tips of the mortgage notes, how to get a discount and low performing note, and how to manage those using simple rules and methods.

Editor’s Note: One of keys to improving investment returns is to track your progress. Plus, it’s always good to know where you stand on the path to financial independence. With companies such as Personal Capital making it extremely easy to track all the assets you own via it’s free tools, you have no excuses not to know what your net worth is at any given moment.

Note Investing

To learn more about investing in mortgage notes, contact us  at Keyhole Academy. Got a question or comment? Please don’t hesitate to put down your thoughts in the comment box below. Also, it would be really great if you visit our Facebook page and like it as well.

Investing in real estate is profitable and has high return on your investment. However, it requires some knowledge of real estate, license and large amount of investment.  Investing in mortgage notes has some distinct advantages. First of all, instantly there’s an immediate discount, even on a single note, and significant discounts when notes are purchased in bulk. Secondly, it’s a lot easier to manage mortgage notes, than it is to manage property.

The first mortgage is the original loan taken out when the house is purchased.  The second mortgage may also be taken out at that time or at a later time as a home equity loan. First and second mortgages are both secured loans secured by your property. However, the second mortgage notes are much less expensive.

To start investing in mortgage notes, you need to understand what mortgage notes are, how to find them and how to understand contracts. All these processes are easy to learn; anyone can do them, doesn’t require a whole lot of investment and are relatively risk free. Interested?

Retirement should always be on our minds when we make financial decisions. How is this change going to affect me long term? Chances are good that since you are here, you already know a bit about discipline and investor behaviors. Here are some articles on more detailed notes on various situations and retirement vehicles.

The second mortgage is what the banks describe as a home equity loan. This allows a homeowner to tap into the home equity to borrow money rather than taking out a personal loan, and use it for home renovation or business capital and such.

Note Investing 101

When you get a mortgage, you may think that the lender will hold and service your loan until you pay it off or sell your home. That’s often not the case. In today’s market, loans and the rights to service them often are bought and sold. In many cases, the company that you send your payment to is not the company that owns your loan.

Promissory note is the deed of agreement you have with your bank when you take out a home loan. By signing this contract, you promise to the bank that you will repay the loan according to the terms and conditions mentioned in the agreement. The bank will hold this document until you pay back the borrowed amount with interest in full.

The mortgage note is signed to provide evidence and security for the loan, and it describes the terms and conditions under which the money has to be repaid. This legal document contains standard covenants between the lender and borrower. The lender will also hold this document until the loan is fully paid off. Once the loan is paid, the lender will record a release of mortgage or a re-conveyance of deed.

Note Investing Training

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As great as it all sounds and despite what some may claim, it is not easy over night riches. Before going further take just five minutes to check out the 5 Big Myths about the cash flow notes business. This type of misinformation was part of the motivation for creating this website.

David Campbell, founder of Hassle-Free Cashflow Investing, has helped hundreds of individual investors like you acquire turnkey rental properties and income producing mortgage notes with less hassle. As a principal or key advisor to hundreds of millions of dollars of real estate transactions, David has a unique ability to simplify complex financial ideas into easy to follow action steps. http://www.HassleFreeCashflowInvestin…

How Does Note Investing Work

Simply fill out the form to register for our available inventory of real estate mortgage notes. The Note Factory creates a continuous supply of real estate notes for private pool of investors. When the note is created, it is packaged and delivered to our investors via our automated system.  Fill out the form to get in the loop.

Believe it or not you can receive all of this in the Finding Cash Flow Notes Training for under $300. That’s less then the cost of just one textbook at many colleges. The power of the Internet now lets us share our 40+ years of combined experience with you in the comfort of your own home at an affordable price.

Some methods like networking and reverse ad marketing require a greater commitment of time while ads and direct mail carry higher costs. No mater how you market it will take your time or your money… and you don’t want to waste either!

With the multitude of challenges our economy has faced the average John and Jane Doe have found it difficult to get a mortgage. Banks want bigger down payments, higher credit scores, and secure employment. These requirements have left over 50% of Americans under qualified for a traditional loan.

Note Investing Course

When a seller accepts an offer and signs a preliminary agreement the investor will start the due diligence process. This includes checking for clear title, determining the property value, verifying payment history, reviewing the buyer’s credit, gathering documentation, and making sure real estate taxes and property insurance are current.

How To Make Money Note Investing

Amy Sayre is President of August REI, a Residential Loan Servicing Company. August REI is a nationally registered, bonded and insured, state licensed residential mortgage loan servicing company that acts as a logistics intermediary between private Lenders and Borrowers. Amy is a recognized expert in debt collection and mortgage loan servicing compliance. http://www.AugustREI.com

Note Investing Books

The note buyer funds the transaction and pays a referral fee to the broker or finder at closing. A transaction is considered closed when the transfer documents from the seller to the investor have been recorded and the proceeds disbursed.

Note Investing Mentor

A convertible note is typically used by an angel investor funding a business without a clear company valuation. An early-stage investor may choose to avoid placing a value on the company to affect the terms under which later investors buy into the business. A convertible note is structured as a loan. The balance automatically converts to equity under terms governed by terms set when a later investor buys equity in the company. For example, an angel investor invests $100,000 in a company using a convertible note. An equity investor invests $1 million for 10% of the company’s shares. The angel investor’s note converts to one-tenth of the equity investor’s claim. The angel investor may receive additional shares to compensate for the extra risk of being an earlier investor.

A promissory note is written documentation of money loaned or owed from one party to another. The loan’s terms, repayment schedule, interest rate and payment information are included in the note. The borrower, or maker, signs the note and gives it to the lender, or payee, as proof of the repayment agreement. “Pay to the order of” is often used in promissory notes, designating to whom the loan is repaid. The lender may choose to have the payments go to himself or to a third party to whom money is owed. For example, Sarah borrows money from Paul in June and lends money to Scott with a promissory note in July. Sarah designates Scott’s payments go to Paul until Sarah’s loan from Paul is paid in full.

While it’s possible to earn while you learn getting a little knowledge up front can jump start your business, save a lot of time, and keep from wasting money. There are numerous options and your selection will likely come down to:

Private Notes – Individuals or private entities providing debt financing on real estate, business, or other assets can convert the future payments due on a promissory note into cash today.  This site is dedicated to the note business segment of the cash flow industry.

What Is Private Mortgage Note Investing

If you want to know more about starting a note business then grab your copy of our free report “How to Make Money With Private Mortgages.” Just enter your email address (in the sidebar at the top right of the page) and we will deliver it straight to your inbox.

Note Investing For Dummies

Marketing is the lifeblood of any company. The number one time commitment will be marketing to find the note holders receiving payments. There are 5 main ways to attract business as detailed in our article on How to Find Cash Flow Notes.

An unsecured note is corporate debt without attached collateral, typically lasting three to 10 years. The interest rate, face value, maturity and other terms vary. For example, say Company A plans to buy Company B for $20 million. Since Company A has $2 million in cash, it issues $18 million in unsecured notes. Because no collateral is attached to the notes, if the acquisition does not work out and Company A stops making payments, investors may have little compensation if Company A is liquidated. Since an unsecured note is simply backed by a promise to pay, it has a higher interest rate and is riskier than a secured note or a debenture, which is backed by an insurance policy in case the borrower defaults on the loan.

 

Sell My Business Note

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So if you need to sell a Church note, retail shopping center note, motel note or other type commercial note, give us a call. We’ll get you a quote usually in 1 business day and will move very quickly to get you your lump sum of cash. So don’t delay. Call Us Today.

In these situations the question that will often come to mind is, can I sell my mortgage note for cash. There is a ready market of buyers for these relatively marketable mortgage instruments, and the process can be easy if your work with the right company. If you have a land contract that you wish to sell, the buyer will in most cases want it converted to a mortgage note. This is to give added protection to the person buying the note.

A good note buyer has a backlog of investors on a waiting list waiting to be notified as soon as a marketable note is presented to the note buyer for review, so selling a mortgage note is very doable. The most secure note is a note that is backed with a single family residential property, with the mortgagor living in the property. Some of the things that a note buyer will look for when buying a note is the type of property, if the contract was written correctly, the credit worthiness of the payer, and if there is a balloon payment built into the agreement.

Sell My Business Note

If you want to sell a mortgage note, one of the biggest problems that will make a note hard to market is having documentation that the payer of the note has good credit. When the note was written, there should have been a stipulation for the mortgagor to provide a credit report and documentation of a stable income source. Those that are self-employed sometime have a hard time getting approved for a land contract as it is hard to verify the actual income and in case of default, the mortgagee may have a hard time finding assets to attach. Wages are difficult to attach even if one is able to get a judgment, as the owner of the business is also the employee and it is easy for the owner to arrange it so that he shows no income.

Sell My Business Note

Lastly, many commercial promissory note holders don’t realize they can sell a portion of a note’s future payments for a nice piece of cash now. This lets the seller get some often much needed working capital for their business but it minimizes the discount they will have to take. It also allows them to treat their note a bit like a ‘piggy bank’, tapping it for cash on two or more occasions. Where else can you get a nice lump sum of cash for your business without the hassle of applying for a bank loan, every business person’s nightmare nowadays? Also, we do not purchase business notes backed by non-real estate assets.

Pragmatically speaking, a commercial property that is generating income becomes much more attractive to potential buyers, AND to potential renters. Part of the value of these types of properties IS how they look to both buyers and renters. Appearance matters. This is NOT news…but it is frequently ignored. It does not hurt to analyze what could make any piece of real estate more viable from both a business standpoint and from the standpoint of attracting customers and buyers. While it’s challenging to try to guess what will attract customers, all businesses that succeed HAVE to figure it out or die trying. Investors, by definition expect to make money. If they want to sell a commercial property they need to make it look good so they can fulfill this worthy goal. Lastly, if you are considering converting your commercial property to sell it, go to our article on converting a commercial property to increase it’s appeal.

sell my business note

Their biggest mistake? They don’t try to make the property look as attractive as possible. Many owners of commercial properties will list them for sale and fail to consider or address street appeal. They are probably wanting to get rid of the entire headache, similarly to homeowners who want to sell their property “as is”. Of course unless the property is in a stellar location and in perfect show condition it may linger on the market, eating through lots of money for years or even decades, just as many residential houses do. Some properties even end up abandoned or foreclosed. Some of this real estate could be generating income streams with a little improved marketing or imaginative repurpousing, although commercial real estate conversions can be hit or miss. The key is demographics research to be sure there is strong demand.

Sell My Business Note

At some point investors will try to cut their losses. A strip mall that is nearly new is currently sitting empty and neglected near us. It’s for sale, but has generated little interest. The seller is a real estate professional. Efforts at getting this property to be fully rented and making money have been notably unsuccessful. We think it would make a great location for some type of home health agency, but have not presented this idea to the owner. Surprisingly even these more sophisticated investors will make the same mistake many homeowners make when marketing commercial property.

Sell My Business Note

That’s where we come in. We specialize in the purchase of commercial seller financed real estate notes. As much of our business is as commercial mortgage buyers, we understand the commercial side of this business. This not only means we nearly always close on a note sale we quoted (and at the quote amount unlike many note buyers in this business), but we close very quickly, getting you cash in days instead of weeks or more. Also, unlike residential payment buyers focusing on residential owner financed promissory notes and dabbling in commercial notes, we close and close quickly as we do our own property evaluation initially through the web, and lastly through an onsite visit. One other pretty unique specialty that we have is that we are interest only commercial note buyers so unlike just about every commercial note buyer out there that will not buy a real estate note that in interest only (not amortized), we can help you sell an interest only commercial note as well as an interest only residential note.

Sell A Mortgage Note

Thinking about selling your commercial property? Commercial properties have many of the same challenges that residential properties have when they go to resale. They may be vacant, rundown and siphoning off $$$ from their owners, rather than making MONEY. Commercial properties, by definition are expected to make money for their owners, regardless of whether the owners are institutional or individual investors. If factors do not come together in an advantageous way a property could sit empty for years while it bleeds cash away from investors.