I was a landlord for twenty years prior to discovering how “Being the Bank” was much better than being a Landlord. The difference between the two is entirely found in the yield return of the investment. A Note investment allows you to receive a higher yield beginning on day 1. It does not require spending unnecessary money on a clogged toilet plumber’s service call or a leaky roof; the expenses are kept to a bare-bone minimal.

Our company has mastered the art of buying non-performing notes and converting them to performing notes. We have been fortunate to find marquee investments throughout our great country. In our portfolio we have a note in California that produces a 335% return every year. Wow is correct. It has been in our portfolio for three years. We have other triple digit yearly performing notes in states like Alabama and South Carolina.

Banks have amassed enormous wealth over many years in real estate finance because they control the asset and income stream without ever dealing with any headaches of ownership. It has worked so well for them for so many years, why would you want to reinvent the wheel?  The bank never gets called by a homeowner or tenant on maintenance issues and yet they are required to be paid first or the homeowner risks losing the house.  

The bank manages their investment portfolio using an electronic report. It helps that a Note investment only requires three things to be effectively managed: the monthly payment, the property taxes, and the homeowner’s insurance policy. All three of these can be managed by a good note servicing company. It becomes the closest asset to having a “mailbox money” system for your investment.

I know this probably sounds too good to be true for many of you. Many people still have the idea that if you want to build true wealth in real estate, your name must be listed as the owner of the property. I now advocate a much different approach because I have learned how to build true wealth in real estate by owning an interest in a recorded lien against the property. In other words, you "become the bank". The bank gets paid every month regardless of maintenance issues on the house. The same cannot be said for tenants who feel they can withhold their rent payment until a five-dollar repair is made.

There are many things you want to avoid when investing in a non-performing Note. It requires you to conduct a thorough due diligence of the asset and the collateral file. But once you do, it’s a great way to invest in real estate. Reach out to me with any questions, I would be glad to help.