Investing In Notes
Investing
in
Debt
Investing in Debt
What the Rich Invest in That the Poor Do Not
Imagine stepping into the shoes of a bank. You make promissory notes, representing debts owed by real estate investing borrowers seeking to finance purchases and refinances of their investment properties. These Notes are a “secured” investment, by virtue of a security instrument called a mortgage or a deed of trust, state dependant. Investing in real estate through a legally binding and court-enforced mortgage is an excellent way for capital investors to invest in notes.
Why Invest in Notes?
Investing in notes offers a unique blend of advantages, compared to other alternative investments. This asset class can provide insight into what the rich invest in that the poor do not, private notes. Private loans also referred to as “notes”, can be secured or unsecured. An unsecured note is a personal loan given to someone with the personal agreement that they will pay back. These are extremely high-risk, and it is encouraged that you not invest in unsecured notes. However, investing in notes that are secured to real property is exactly what the rich invest in that the poor do not. Secured not investing, simply means that there is a legal process, and those documents are of public record. This allows anyone to search and identify who the borrower is and who the lender is. Investing in notes secured to real estate provides a guarantee; if the borrower does not pay, or adhere to the obligations written in the mortgage (which the lender dictates) then the lender can take the asset from the borrower. It is truly one of the safest forms of alternative investments. Below is a short list of additional reasons why sophisticated investors, seek out and demand diversifying their investment capital toward investing in mortgage notes:
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Investing in mortgage notes typically generate predictable, recurring interest payments, creating a reliable income stream for investors.
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Compared to stocks or bonds, notes are less susceptible to market fluctuations, providing a buffer against economic downturns.
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Notes are often secured to collateral, such as real estate, by way of security instruments, commonly referred to as mortgages or deeds of trust.
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Investing in notes places the capital investor in a unique position of control. You can make the rules that the borrower must play by. My partners are taught how to invest in mortgage notes through Blue Bay Fund.
Find out how dozens of investors have taken advantage of my investors club, learning about note investing and syndication investments. Its 100% FREE and comes with NO OBLIGATION. Anyone can join, the only requirement is that you strive to be sophisticated with your investments and are committed to learning and exploring different assets, methods, strategies and techniques to expand your passive investing portfolio.
Invest in Assets, not Liabilities
When capital investors decide investing in mortgage notes is the method they want to use to diversify their portfolio, they are looking at investments through the eyes of a banker. Mitigating and shifting risks is the name of the game of lending and is the primary asset what the rich invest in that the poor do not. When you invest as the lender in real estate, you are able to make the rules that the borrower must play by, and you are placing the responsibility and liability of those assets at the feet of the borrower. However, you also receive the benefits of owning the asset simply by investing in real estate notes. All the protective measures you require, such as property insurance, lenders’ title policy, property inspections, feasibility inspections, and project management, are all paid for by the borrower. This is truly the most passive form of real estate investing there is!
You can underwrite the loan requests, verifying and fact-checking all the information found within those documents. This requires keen insight, awareness, and discernment by capital investors who invest in mortgage notes. You can wire the entire requested loan amount to the real estate investor’s title company. You will then need to service the loan, collect payments, inspect the project if there is construction involved, and oversee legal issues if there is a default. Depending on the state where the asset is located servicing your own notes secured to real estate may require a license, annual fees and ongoing education, which can increase business overhead.
How to Invest in Mortgage Notes?
Instead of building a real estate business investing in notes, lear how to invest in mortgage notes the way that sophisticated investors have decided to, through Blue Bay Fund I real estate fund of funds! Its 100% passive, the investor remains completely in control, and you do not have to find the time to gain the knowledge and then put that knowledge to work to gain experience, costing you precious mistakes to your passive investing plans.
Ultimately, investing in real estate notes can be time-consuming and create a whole new J.O.B. unless you have a team, and experience in vetting and mitigating risks. Experience is the hardest teacher and unforgiving, and could even find yourself losing your principal, ask me how I know!
Capital investors may invest in notes, secured to real estate in several different ways. You can market for, and network with real estate investors who are looking for a private lender. You can process the loan request by collecting pertinent documents necessary for your underwriting. This is time consuming and not the most passive form of investing in real estate notes.
Barriers to Investing in Real Estate Notes
While mortgage notes offer attractive potential returns there are common barriers that stand in the way of investors being able to diversify their alternative investment investing in mortgage notes:
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Finding reliable sources of quality borrowers isn't always easy. Unlike publicly traded securities, notes don't have a centralized marketplace. Investors may need to rely on niche brokers, networks, or direct seller contact, which can be time-consuming and require specialized knowledge.
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Information on how to invest in mortgage notes can be limited, particularly on how to create these investments. Due diligence requires scrutinizing loan documents, property details, and borrower history, which can be challenging for smaller investors with limited resources.
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Investing in notes often requires more upfront capital compared to other investments. Depending on the loan size and type, initial investment amounts can be significant, potentially excluding individual investors with lower liquidity.
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Unlike stocks or bonds, notes aren't easily traded on secondary markets. Selling a note before maturity can be difficult, making them less flexible investments and potentially locking up capital for longer periods.
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Managing notes involves legal and servicing intricacies. Investors may need to handle delinquency issues, foreclosures, or property management, which can require expertise and resources beyond simple financial analysis.
Investing in Mortgage Notes
By, With and Through Blue Bay Fund
I believe that Blue Bay Fund offers a unique and highly flexible way for investors, like you, who are seeking alternative investment options to invest in notes. By becoming an investor in Blue Bay Fund my partners experience the benefits of a customizable fund that invest in assets not liabilities. Here are the biggest benefits to invest in mortgage notes through the Blue Bay Fund:
Low Barrier to Entry:
The minimum investment in Blue Bay Fund I is $50,000. This is significantly lower than what most 1st position loans secured to real estate will require from an individual investor.
When an investor becomes a partner with me in Blue Bay Fund, they are immediately presented with numerous options for investing in notes. Our debt investments are spread out across multiple markets throughout the Southeast United States, as well we invest in mortgage notes secured to single-family residences, multi-family, and even commercial properties. Experience what the rich invest in that the poor do not.
True Diversification:
One of our most unique and attractive capabilities is to be able to invest in note “slices” for as little as $1,000 per loan. This means my partners can take their $50,000 min. investment and potentially spread that out across 50 different loans. That is mitigating risks and how you invest in assets not liabilities!
Fractional Investing:
Customizable Returns:
Because my fund allows for fractional investing, diversified across multiple asset classes and multiple states, this allows my partners to truly pick the type of investments that will generate the type of returns they are looking for in their portfolio.
No longer will you have multiple 1099-INT’s from all of your mortgage notes. We provide one K-1 tax filing to your CPA for the overall performance of your portfolio. Because we also offer equity investments, your depreciation can offset your note investing income, truly giving you control over your taxable income.
Simplified Taxes:
Life is better with friends! My partners are all considered part of my family. Family’s exist to serve one another and we have created a sophisticated community of like-minded investors and visionaries that help each other in many aspects of their investing career.
Investor Club:
Your Investing Journey Starts with a First Step
Investing with me, through the Blue Bay Fund, is like having a trusted guide on your journey to financial security. We help you navigate the complexities of the market, select the right investments, and reap the rewards of this stable, dependable, and secured asset class. Ready to take the next step? Contact Blue Bay Fund I today and explore how we can help you build a brighter financial future through note investing.