“Gail, why are you investing in real estate notes? You were doing so well “fixing and flipping” properties!”
It’s a fair question given the fact I am a licensed real estate agent and have been buying and selling homes since I was a kid—literally. I was 19 when I bought my first home and had spent a childhood cleaning and painting my Dad’s and uncle’s rental properties. They were both successful real estate brokers in the San Francisco Bay Area so I did well for myself supplementing my allowance on weekends and during summer vacation. It also made me realize that, over time, true financial wealth and freedom can be had by investing in real estate.
We were doing fine in our business model of buying properties and either fixing them up and selling them or holding them for our personal portfolio. Then along came all of these ridiculous television shows “Fixing This Flop” and the like depicting how “easy” it is to make a fortune in real estate. Next thing I know, I am competing for scarce inventory against my fellow investors who know how to manage a renovation, newbies who think they know how to manage a renovation, and buyers who want to build sweat equity and live in the property. My profit margins suddenly dropped and I had to stay on top of every penny that went into a renovation. I danced in the streets if I manage to make anything over 12% net return on investment (ROI)!
Always being one to “zag” when everyone else is “zigging,” I started to research what options and opportunities existed in the real estate industry. We jumped on the “multi-family” and commercial wagon. So did all of the disgruntled seasoned investors who discovered what I was already starkly aware. The prices on those properties escalated too.
There is a constant barrage of “Real Estate Gurus” that tout the latest and greatest ways to make serious cash in the real estate investment world. Some say you can be successful with their “get rich quick” schemes. Others will say that you can get rich over time. The one thing I genuinely know is that cashflow is king/queen in this business. Living in hurricane alley makes it a real challenge to buy and hold properties for that coveted cashflow.
So what’s left? The other observation I’ve made in my life is that banks have money—and lots of it. They say “He/She who holds the gold gets to make all of the rules. Who has the gold? Banks do. I am almost embarrassed to admit I had no idea that a person could buy and sell notes. It makes sense since they are essentially personal property. There are notes secured by everything from automobiles to zebras! Well not zebras, per se, but pretty much everything in between. One can definitely invest in notes secured by real estate. In this country, there are trillions of dollars (yes, with a “T”) worth of defaulted mortgage notes. That surely limits the competition! Additionally, there is only about 4,000 note investors in this country. Although, I am not a gambling woman, I liked these odds.
Let’s get down to returns. Recall I mentioned I was struggling to make a 12% net ROI on my “flips?” Let’s just say that I smile, no I break out into laughter when I realize I was willing to stay on top of a project and scrimp and save to make that.
So what is this note investing all about? It is about being mobile. We invest all over the country and I am not anchored to a location until a project is complete. It means offering greater than average returns for those holding self-directed IRAs (SDIRA). It mean being able to help struggling borrowers keep their homes because the note holder is now is the bank. It means having a real estate investment or REO without worrying about a stopped up toilet or a vacancy. The bank gets paid every month no matter what! Cash flow without the headaches!
We welcome you to call us if you are interested in finding out if investing in distressed notes and assets might be something that would fit into your investment strategy. Please call, email, or text and I assure you that I will personally call you back so we can chat about this exciting way to build financial wealth and freedom SLOWLY! Slow and steady wins the race—the real estate investment race, that is!