Promissory Notes Are Investing Tools - Discover New Opportunities
Stocks and bonds should not be the only investing tool in your financial tool box.
Investing in real estate notes (property notes) is reasonable safe, versatile, and will widen your investing opportunities: the yields are higher; they are an under used tool.
What is a real estate mortgage? Real estate notes, mortgage notes, and deed of trust notes are terms used interchangeable to describe the two documents used to fund a property purchase.
The two documents are: (1) promissory note and a (2) mortgage document.
These two documents are commonly called "the mortgage"; when people say I have a mortgage they are referring to these two documents.
What is a promissory note? It is a written promise made by one party to make one payment, or periodic payments, plus interest, to another party; it is a binding, legal contract; it may be secured by real estate or other assets; in may be unsecured; it is usually a "negotiable instrument" that can be resold or pledged as security for a loan.
What is a real estate investment note? Real estate notes, also called mortgage notes or mortgages, have been around for as long as there have been real estate buy-sell transactions.
They are created to facilitate the financing of a purchase for a buyer who cannot pay the full purchase price at the closing.
The mortgage comprises two documents-a real estate mortgage and a note.
The lender/note investor advances funds to complete the purchase and the borrower/property buyer signs a promissory note.
A real estate note can be a wise choice for a conservative investor.
What funding sources are available to the note investor? Funding sources are many and varied.
The investor can fund the mortgage loan with personal savings, with other participating investors, with bank borrowing, or with retirement account funds, such as a self-directed IRA account or a 401(k) account.
It is a legal and common practice to use a 401(K) or a self-directed IRA to invest in property notes.
The great thing about these notes is they are secured by real property: if there is a default, your risk of loss is minimized.
What are the benefits of property note investing? • Passive income is generated.
• The interest rate/yield is higher than stocks or banks pay.
• Managing a note is less burdensome then managing rental property.
• Risk of loss can be reduced by having adequate collateral security.
• A note is a capital asset; if sold, the gain is taxed at low long-term capital gains rates.
• The investment can be within a tax-free or tax-deferred IRA or 401(k) account.
• No management fees need be paid to a third-party.
• The mortgage note investment can be located near to you; it can be easily watched and monitored.
• More than one investor can be involved to spread the risks and the responsibilities.
Conclusion Today we are in a low investment interest rates environment- --1% to 2%; a 6.
5% a note secured by property is very appealing to the long-term investor.
Investing in a note secured by property may be an excellent choice for your retirement planning.
Know what you own, and know why you own it.
It's not how much money you make, but how much money you keep.
Do you know any millionaires who became wealthy by investing in savings accounts?
Investing in real estate notes (property notes) is reasonable safe, versatile, and will widen your investing opportunities: the yields are higher; they are an under used tool.
What is a real estate mortgage? Real estate notes, mortgage notes, and deed of trust notes are terms used interchangeable to describe the two documents used to fund a property purchase.
The two documents are: (1) promissory note and a (2) mortgage document.
These two documents are commonly called "the mortgage"; when people say I have a mortgage they are referring to these two documents.
What is a promissory note? It is a written promise made by one party to make one payment, or periodic payments, plus interest, to another party; it is a binding, legal contract; it may be secured by real estate or other assets; in may be unsecured; it is usually a "negotiable instrument" that can be resold or pledged as security for a loan.
What is a real estate investment note? Real estate notes, also called mortgage notes or mortgages, have been around for as long as there have been real estate buy-sell transactions.
They are created to facilitate the financing of a purchase for a buyer who cannot pay the full purchase price at the closing.
The mortgage comprises two documents-a real estate mortgage and a note.
The lender/note investor advances funds to complete the purchase and the borrower/property buyer signs a promissory note.
A real estate note can be a wise choice for a conservative investor.
What funding sources are available to the note investor? Funding sources are many and varied.
The investor can fund the mortgage loan with personal savings, with other participating investors, with bank borrowing, or with retirement account funds, such as a self-directed IRA account or a 401(k) account.
It is a legal and common practice to use a 401(K) or a self-directed IRA to invest in property notes.
The great thing about these notes is they are secured by real property: if there is a default, your risk of loss is minimized.
What are the benefits of property note investing? • Passive income is generated.
• The interest rate/yield is higher than stocks or banks pay.
• Managing a note is less burdensome then managing rental property.
• Risk of loss can be reduced by having adequate collateral security.
• A note is a capital asset; if sold, the gain is taxed at low long-term capital gains rates.
• The investment can be within a tax-free or tax-deferred IRA or 401(k) account.
• No management fees need be paid to a third-party.
• The mortgage note investment can be located near to you; it can be easily watched and monitored.
• More than one investor can be involved to spread the risks and the responsibilities.
Conclusion Today we are in a low investment interest rates environment- --1% to 2%; a 6.
5% a note secured by property is very appealing to the long-term investor.
Investing in a note secured by property may be an excellent choice for your retirement planning.
Know what you own, and know why you own it.
It's not how much money you make, but how much money you keep.
Do you know any millionaires who became wealthy by investing in savings accounts?