My wife, Christy, and I have spent the past twenty years making real estate an active part of our investment strategy. Christy bought her first duplex in her mid-twenties, and we bought our first fourplex soon after we bought our first home together.
Throughout the years, I’ve attended several real estate seminars and have learned many investment strategies for buying and selling real estate. We have had the opportunity to participate in lease-to-own agreements, foreclosures, vacant land, storage units, flips, private notes, multi-family units, town homes, and most recently, we used our IRA to purchase three lots in Belize.
As most savvy real estate investors know, the market opportunities presented by the collapse of the real estate bubble are virtually gone. 2012 was the low point in the collapse. Since then, most of the foreclosure inventory has disappeared.
If you have followed the real estate market, you will know that the foreclosure crisis ended much more suddenly than analysts predicted. We knew that there was a huge number of homes that should have gone through foreclosure, but the foreclosures never happened. For months, it was speculated that banks were being encouraged to hold on to the properties to artificially stabilize the market. What happened to these non-performing loans?
The answer lies in notes. Rather than go through the time and expense required by strict foreclosure regulations, banks are getting foreclosures off their books by selling their non-performing notes to hedge funds.
So what are notes? Notes are loans that are secured by property. They are often referred to as mortgages.
It is estimated that hedge funds own approximately 10 million notes, often purchased in bulk for pennies on the dollar. This presents the most exciting real estate investment of our generation. These notes can be purchased by private investors for as little as $9,000.
Hedge funds want to convert billions of dollars of notes to cash. Many experienced investors are choosing notes as their primary investment strategy.
Investing in notes can be as simple as owning stock. But notes offer the added benefit of personal control over your investment. Notes create consistent passive income without the hassles involved with being a landlord.
Last weekend, I attended a workshop in San Francisco where I learned about the pros and cons to owning notes. I would be happy to share that information with you if you e-mail me at john@johnrounds.com.
