Owning real estate is one of the best types of investments on the market right now. While stocks and bonds can lose money over time, real estate is relatively stable and seems to go up in value over the course of many years. However, instead of going out and trying to find a good property and working with a realtor, a lot of investors are choosing to go with real estate note buying. Note buying is an entirely different form of investing that entails purchasing mortgage notes tied to different properties.
What is a Real Estate Note?
A real estate note is attached to property that is either going through foreclosure or whose owners are late on their payments. The note gives you first dibs to the property once the foreclosure has gone through, which is an ideal way to get a short sale for a home or piece of land for an incredibly low price. In fact, there have been instances of people buying homes with these real estate notes for just a few thousand dollars.
How to Buy One
The way that you purchase real estate notes is by working with a reliable company and sorting through the range of notes they have available. These notes are attached to homes that are either going through foreclosure or whose owners are not paying their monthly mortgage. The way that the note might not work to your advantage is if you purchase one and then find out that the homeowner started making their payments or was able to get out of foreclosure. In this case, you would lose the money that you put into the investment of the real estate notes.
What to Expect
Real estate notes are incredibly easy to purchase, but you need to be aware of which ones you’re buying. Because some notes are essentially worthless, you need to scour through the hundreds in your area that are available to find the one that is right for you. You can also work with the real estate buying company that offers the notes to figure out the historical data attached to each property and its owners’ payment history. By understanding their payment history and the amount of people who have owned the home, it will be easier for you to know what is available to you and which notes are worth investing into.
Where to Buy
It can be problematic to try to purchase these notes on your own because you need to make sure that they are authentic and that your investment is genuine. If you think you’re purchasing a note without it being legally purchased, you have absolutely no rights to the property and will lose the money you put into the note in the first place. To avoid this from happening, you’ll need to look for a note buying agency either locally or online so that you can go through their available notes and purchase one legally.