Does buying notes from banks really offer the ultimate, bulletproof, high-return investment these days?
There is an increasing trend to buy mortgage loan notes from banks and many don’t get it.
It isn’t just about jumping on the next hot thing or a fad; it’s about finding the best possible investment vehicle and seizing on the best opportunities of today for ensuring ongoing income, reasonable returns, and maximum protection for capital.
Even stock market pros and top strategists at firms like Goldman have been recommending Americans exit the stock market, while over-hyped gold lost heavily in the last year or so.
It may be true that to buy notes from banks profitably it may involve a little more thought than trying to flip houses with no down-payment, but at the same time that is exactly why smart investors are doing it.
Yes, you can buy mortgage notes as a complete novice and just sit on them and collect the income for years. And, yes, you can find that they are producing far better returns than other options out there today, while at the same time others who are hungrier are successfully flipping them for rapid capital growth. However, the real reason to buy notes from banks today is the safety they provide and the hedge against economic turns they provide.
Mortgage notes provide many exit strategies and plenty of flexibility to weather whatever the economy and real estate market is bringing. The truth is that no one knows 100% what that will be. The housing market have be showing many positive signs and (short term) historical data on cycles supports the optimism that it will continue to boom over the next decade or more. On the other hand macro-historical cycles indicate that a major depression could come and devastate the United States
The beauty of investing in mortgage notes today is that it doesn’t really matter what happens. These notes will remain one of the most sought after investment instruments and will increase in value. If the economy falls into the greatest depression we’ve ever seen these notes will be better than gold for income investors. If the housing market takes off notes are more likely to perform. And even if they don’t, there will be huge windfalls of equity for those who foreclose on them.