Bike Homes Starts Dining Room Table Talks for Note Investors
I remember as a kid one of the best times was when my family would sit down for dinner at the dining room table and just have time to talk about things that happened that day or events going on in society. Those were days when life wasn’t so crazy and people actually took the time to sit down as a family to spend time at dinner, so we thought we would bring back those times with what we are calling our Dining Room Table Talks for Note Investors.
So we are going to start our Table Talks with something we get asked about so often from our friends: Why Notes? Or What exactly is a note?
For all you newbies to Notes, a note is simply the piece of paper that is the promise to repay a loan such as a 1st or 2nd mortgage. In our case it is backed by the real estate. We buy these notes which are non-performing directly from the banks for our own personal portfolio. So in short, we become the bank.
Well we are going to talk a little bit about some of the differences between traditional real estate investing and Notes that we have learned.
The first thing is there is more inventory in notes than traditional real estate. Did you know that there are currently about 6 million homes under water? Meaning they owe more than what their house is worth? There are also about 3 Million more loans starting to default. That’s 9 Million in homes that Note investors have an opportunity to act on. Plus, we see these properties 6 to 12 months ahead of traditional real estate investors.
The 2nd thing is Note Investors get better pricing on these distressed assets. Typically, we can purchase a non performing asset at 50% of Fair Market Value instead of the 80 to 85% that traditional investors pay once it hits the market as a Real Estate Owned (REO) or bank owned property that has gone to foreclosure.
The 3rd thing is with Note investing, there are more exit strategies. We have about 9 different choices depending on the asset. We will spend other table talks focusing on these exit strategies.
Finally, Notes are recession proof. It doesn’t matter what the economy is doing, note investors still have the opportunity to purchase the distressed assets and get better Returns on Investments (ROI) than other types of investments.
So that concludes our Table Talk for Note Investors for today. Thanks for taking the time to join us.
Stay tuned for our future talks where we will be talking about each Exit Strategy in detail for Note Investors.