Why Being the BANK is the Safest Position in Any Real Estate Investing Transaction
My Fellow Compassionate Capitalists:
Growing up in Canada one of my favorite things to do was walk through all the homes on the Street of Dreams. It was a parade of homes with beautiful designs in a picturesque neighborhood. Some years there was even an auction or a raffle and one of the dream homes was able to be won by a lucky family. This eventually grew into me loving the “Before and Afters” on HGTV which I still absolutely love to watch to this day.
This passion for real estate turned into me becoming a real estate investor. I was fortunate that my first real estate mentor shared with me that there are many positions that you can play in any real estate investment transaction. You can be the buyer, the seller, the realtor, the bank, the title company, contractor, subcontractor, and so on. My mentor asked me the question which position I thought was the most secure. The answer…….THE BANK!! He went on to explain why the bank is the most secure position to be in.
The list is quite extensive.
1)You own the note… not the property.
2)You are not responsible for the borrower.
3)You are not responsible for tenants.
4)You are not responsible for toilets.
5)You are not responsible for any repairs or maintenance.
6)You are not responsible for taxes.
7)You are not responsible for insurance.
8)You are not responsible for HOA fees.
9)You are in the first lien position so the HOA along with anyone else CANNOT take the note from you.
10)You simply get all of the benefits of having the borrower pay you for the mortgage note.
11)If the borrower defaults on paying their mortgage you have the first position to be able to go in and foreclose. You then own the actual property which would allow you to sell it and recoup your investment for the initial note.
I have played most of the roles in being a real estate investor and my favorite….. hands-down….. is being the BANK!!!!! I love that we have the opportunity to give our investors the opportunity to be the bank as well!!! They can do this without having to build the team and infrastructure like we have had to do. This creates a win-win for everyone by avoiding redundancies.
Investing in mortgage notes has some great benefits as well.
1)Rates of return are higher than the bank’s traditional low yield bonds.
2)Rates of return are HIGHER than most stock dividends.
3)Interest rates on private notes are far higher than current rates for CDs and other interest bearing investments.
4)Performing notes are a great portfolio diversification and risk management tool for cautious investors.
5)Notes are easily available through Notes exchanges, no brokers, and other organizations.
I hope this was able to give you an idea on why being the bank is the safest position you can take in any real estate transaction. So if you are looking for passive monthly income, then performing notes could be for you! Click on the links below in order to find out more on how we can assist you to “NEVER awake from the American Dream”!
Steve Wahl/ Mobile Home Park Mogul & All Around Hell Of A Guy
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