How to Beat REIT’s and Syndications with Blue Bay Fund
Invest Like a Banker Instead of a Landlord. This is Why Most “Passive” Real Estate Investors End Up with More Risk and Less Control.
Most people think ‘passive real estate investing’ means handing your money to an operator and collecting checks. But what if that belief has been costing you control, and exposing you to more risk than you realize?
For years, investors have been sold the idea that syndications, REITs, and real estate funds are ‘set-it-and-forget-it’ solutions. Just park your money, trust the operator, and enjoy the returns. But here’s the twist: most ‘passive’ real estate investments aren’t passive at all. If they are marketed as passive, they aren’t nearly as safe as they seem.
Why?
Because most of these investments leave you on the riskiest side of real estate, the equity side. When property values drop, so do your returns. When tenants stop paying, so does your income. Meanwhile, someone else keeps getting paid:
The bankers.
They aren’t betting on properties, they’re profiting from the debt: Real Estate Investor Notes. And that’s where most investors are missing out.
In this post, we’ll break down why real estate investor notes are the safer, smarter way to invest in real estate, and how Blue Bay Fund helps you invest like a banker.
The Late-Night Portfolio Check That Made Me Question Everything About Real Estate Investing
From 2008 - 2012, I watched the real estate market collapse around me. Investors, smart, experienced people, lost everything. Property values tanked, equity evaporated and tenants vanished. The ‘passive’ income they relied on disappeared overnight. But one thing stood out to me most:
Real estate can crash, and owners can lose everything, but the lender still controls the collateral, normally for a lot less than what the investor has put into the project!
The bankers weren’t losing. They were still getting paid. That’s when it hit me:
I realized quickly that the safest position wasn’t owning the property, it was owning the debt that secured the property, thus controlling the asset without assuming the liability or responsibility of owning the asset.
The investors who kept winning, no matter what the market did, weren’t the owners. They were the lenders. So, I made a decision that changed my entire financial future:
I skipped buying real estate and went into lending on real estate.
I stopped playing the real estate game from the equity side and started thinking like a banker. I focused on real estate investment notes, the contracts that pay the lender first, no matter what happens to the property.
And that insight became the foundation for Blue Bay Fund, a fund designed to give everyday investors access to the same wealth-building strategy that bankers have used for centuries.
Because in every real estate deal, someone is the banker. And for once, it should be you.
Why Property Owners Lose Money in Downturns, While the Bankers Keep Cashing Checks
Most passive investors never stop to ask a fundamental question:
Why do bankers always get paid first, even when the real estate market crashes?
It’s because they aren’t betting on properties, they’re profiting from the debt.
While equity investors rely on property appreciation and tenant payments to generate returns, bankers secure their profits through notes.
Notes are the legal contracts between a borrower and lender that guarantee monthly payments on a loan. Almost like a legal IOU. If the borrower defaults, the lender can foreclose, sell the property, and get paid first.
This is exactly what played out during the Great Recession of 2008:
Homeowners lost their properties.
Equity investors saw their portfolios wiped out.
But lenders holding well-structured real estate investment loans had the legal right to foreclose and recover their capital.
Real estate note investors stayed protected, because they were first in line to be paid back in the case of a default. Best case scenario…. They received monthly interest payments while everyone else was worried their investment portfolio would collapse..
Why does this matter to you?
Because this “banker’s secret” isn’t reserved for billion-dollar institutions anymore. Real estate note investing is now accessible to accredited investors who want passive income without the rollercoaster of equity-based real estate.
So why haven’t more investors switched to the debt side of the deal?
Simple. Most people don’t even know this strategy exists.
But that’s starting to change.
Investment Notes Have Been Around for Centuries… But Something Has Changed in the Last 2 Years
If investing in real estate notes is such a reliable strategy, why haven’t more investors jumped on board sooner?
For years, interest rates were historically low. Banks profited from origination fees rather than interest income, and equity-based investments seemed more attractive as property values soared.
But today’s financial landscape has shifted. Here’s why now is the time to think like a banker:
Rising Demand for Real Estate Investor Capital
With banks tightening lending standards and charging higher rates, real estate investors are seeking alternative funding sources to fuel their projects. This increased demand for capital creates consistent, high-yield opportunities for note holders.
Higher Costs of Traditional Bank Financing
As borrowing costs climb, many real estate investors turn to private lenders for faster, more flexible financing. This trend strengthens the short-term note market and positions investors to earn attractive yields from borrowers who prioritize their payments to maintain their investment properties.
Investment Property Demand
Housing demand continues to exceed supply, driving property owners to prioritize loan payments. This dynamic lowers the risk of defaults, while strong property values safeguard collateral and protect investors’ positions.
Frustration with Wall Street Products
Wall Street’s 'passive' products often come with hidden fees and limited transparency. Real estate investor notes, by contrast, are secured by physical assets, offering clear performance metrics with no opaque fee structures.
Why Now?
The same conditions creating chaos in traditional markets are unlocking opportunity for note investors. Higher rates drive stronger interest returns, while rising demand stabilizes performance. With Blue Bay Fund’s customizable approach, accredited investors can now leverage these benefits while retaining full control of their portfolios.
How Blue Bay Fund Helps You Invest Like a Banker, With More Control, And Without Complexity
Most passive investors assume that choosing a fund means giving up control. You pick a firm, hand over your money, and trust that the fund managers will make the right decisions. But what if you could control where they put your money if you wanted to?
That’s where Blue Bay Fund breaks the mold.
Our approach puts you in the driver’s seat without adding complexity to your investing experience. We designed our system so you can customize your portfolio according to your financial goals, while we handle the day-to-day operations.
Here’s what makes our model different:
Choice of Debt or Equity
Most funds lock you into either an equity or debt strategy. At Blue Bay Fund, you get to choose. Prefer the consistent income from real estate notes? Stick with debt. Want to participate in potential property appreciation? Opt for equity. Or, build a hybrid portfolio to balance security with upside potential.
Short-Term Loan Structure (18 Months or Less)
Blue Bay Fund invests exclusively in short-term real estate investor loans, typically 18 months or less. Short-term loans limit market risk by reducing exposure to long cycles, provide faster loan turnover, and create more frequent opportunities for reinvestment—allowing investors to benefit from compounding returns.
Customizable Allocation
With most funds and syndications, your money is locked up, and you’re stuck with whatever strategy the operator chooses, no adjustments, no control. But with Blue Bay Fund, you decide how your capital is allocated. Want to shift from debt to equity or rebalance your mix as market conditions change? You can. Your portfolio stays as flexible as your goals.
First-Position Protection
At Blue Bay Fund, your investment is secured by first-position liens and low LTV ratios. Making sure that the property's value exceeds the loan amount and that you are first in line to be paid in any foreclosure scenario. Also, property insurance protects the underlying collateral from physical damage, preserving its value and providing an extra layer of security.
Transparent Reporting
Ever wondered where your returns actually come from? So did we, which is why we built a reporting system that keeps you informed. You’ll always know how your notes are performing, with clear, jargon-free updates available whenever you need them.
But here’s the key:
Customization alone isn’t what makes this strategy compelling. It’s how real estate investor notes fundamentally shift the risk-reward equation in your favor.
Let’s unpack that next.
The 3 Simple Rules to Make Real Estate Investor Notes Work for You (That Bankers Have Followed for 100+ Years)
Real estate note investing sounds intriguing, but how does it really work? And why does it consistently outperform equity-based strategies in terms of risk-adjusted returns? Here are the key principles that make this strategy so effective:
1. First-Position Notes Get Paid First
In the real estate world, payment priority matters. Notes that are in the “first position” get paid before any other creditors or equity holders.
Example:
Imagine a property sells for $500,000 after foreclosure. If there’s a $300,000 first-position mortgage and $100,000 in equity investors, the first-position note holder gets paid first, from the sale proceeds, before anyone else. Equity investors only get what’s left, if anything.
And during the 2008 crash?
First-position note holders maintained their legal right to be paid first from any foreclosure sales, recovering their capital before equity investors, many of whom lost everything. Even in a down market, secured debt holders were in a stronger position, often collecting partial payments, loan workouts, or proceeds from property liquidation, while equity investors were wiped out.
2. Loan-to-Value Ratios (LTV): Your Built-In Safety Net
The LTV ratio tells you how much of a property's value is financed by debt. At Blue Bay Fund, we prioritize notes with an LTV below 70%, meaning the property is worth significantly more than the loan itself.
Why this matters:
If a borrower defaults, the property can be sold to recover the loan. A conservative LTV provides a protective cushion, even in a market downturn.
3. Real Estate as Collateral: The Ultimate Backstop
Unlike stocks or unsecured bonds, real estate notes are tied to tangible assets. If the borrower fails to pay, the property itself can be foreclosed upon and sold to recover the investment.
Think of it this way:
When you invest in stocks, your returns depend entirely on the performance of the underlying company, a claim on the business, not the assets. With real estate notes, your returns are secured by the home itself, an asset with intrinsic, enduring value.
So, what’s the takeaway?
Most investors are never taught about real estate note investing because it doesn’t fit the mainstream narrative of “passive income through property ownership.” But as banks have proven for centuries, owning the debt, not the property, is where the most predictable wealth is built.
And the best part?
It’s easier than most people think to get started.
The Difference Between Real Estate Investor Notes and Traditional Mortgage Notes
Real estate investor notes might sound unfamiliar at first, but it’s actually similar to something most people understand: providing a mortgage to an everyday homeowner.
Imagine you buy your home. You want to leverage your money so you get a traditional mortgage. Your bankers doesn’t worry about property upkeep, repairs, or dealing with tenants, taxes, or insurance. That’s the owner’s (YOUR) responsibility. Their focus is simply making sure you pay your monthly mortgage payments.
And if you stop paying? The banker has the ultimate safety net: the property itself.
The Banker can foreclose, sell the home, and recover their investment because their loan is secured by real estate.
Investing in real estate investment loans work the same way, but the borrowers are investors, not homeowners, and you play the role of the banker. Your loan is secured by investment properties, providing a layer of protection while you earn interest without managing properties yourself.
The real estate investor is now the one who is responsible and liable to pay the taxes, insurance, and your monthly payments. The real estate investor has to deal with the three big “T’s” of RE Investing; Tenants, Termites, and Taxes!
This approach flips the typical real estate investor mindset on its head. Instead of betting on property appreciation or dealing with tenant issues, you become the lender—collecting interest payments without the headaches of ownership.
For decades, bankers have used real estate loans as a low-risk, high-predictability source of income. Now, with platforms like Blue Bay Fund, accredited investors can do the same.
But here’s the big question: Why has this strategy remained a secret for so long?
Are You Wondering If Investing in Real Estate Investment Loans Make Sense to You?
Here’s What You Need To Know
At Blue Bay Fund, we don’t believe in gatekeeping good ideas. Our mission is to help investors break free from the myths surrounding passive investing in real estate, and to show them how thinking like a banker can unlock more stable, predictable income streams.
Real estate note investing isn’t for everyone. It requires a different mindset: one focused on consistent, long-term results instead of short-term market swings.
But if you’ve ever felt frustrated watching the stock market’s wild ups and downs, if you’ve wondered how banks manage to thrive in every market condition, or if you simply want to build passive income without becoming a landlord…
Then, it might be time to explore investing in Real Estate Notes through Blue Bay Fund.
Curious to learn more?
Explore the rest of our Journal, where we break down everything from loan structures to risk mitigation strategies.
Or, if you’re ready to dive in, reach out to our fund Manager, Edwin D Epperson III. No sales pitch. Just insights, clarity, and a transparent look at how we help investors take control of their portfolios.
Because when it comes to your financial future, you deserve more than a one-size-fits-all solution.
You deserve the power to choose.
With Honor,
Edwin D. Epperson III,
Manager and CEO
Soli Deo Gloria
