WHAT IS MORTGAGE NOTE INVESTING?
Here’s how Lorraine Millington from Melanin Homes, an expert on this subject explains it :
When you buy a house, you acquire a loan and start making monthly payments to repay it. That is a real estate note. The document that describes the details of your loan is called a mortgage note. What many people don’t know is that these notes can be traded. These loans can be sold to a lender, and many investors have used this opportunity to make profits.
WHAT ARE THE TYPES OF MORTGAGE NOTES?
For residential properties, real estate notes can be divided into the following:
What Are The Advantages of Investing In Mortgage Notes?
1. No Management Of The Property
One of the reasons why many investors choose mortgage notes it’s because it saves the stress that comes from being a landlord. In this case, you only receive the income without the headaches of being the landlord.
2. No Issues Concerning Maintenance
As the homeowner, if anything should break, you will be the one to fix it. However, as a lender, all maintenance is the responsibility of the homeowner, so no maintenance for you!
3. Lien Is Secured By Real Estate
In clear words: with mortgage notes, you have the right to foreclose or take back your property if the borrowers suddenly stop paying their mortgage.
4. You Buy The Property At a Discount Rate
This is the greatest advantage of investing in mortgage notes. Because banks cannot handle these notes, they make offers to investors at a discount. Depending on the property, these discounts can be between 50-90%. As a lender, this will increase your ROI (return of investment) and also secure your capital.