We’re going to let you in on a secret. Do you know why experienced investors prefer mortgage notes?
Sure, there are many benefits to mortgage note investing including it could generate above-average income with relatively low risks and it’s an exceptional social investment.
But here’s arguably its most attractive advantage from the perspective of experienced investors—when you put your money in mortgage notes, your investment is secured by real estate assets. That’s right, mortgage note investments are real estate backed!
Let’s break down the significance of this.
Think about stock investing for a moment. What happens when your stocks lose value? There’s no real collateral and you could potentially lose your investment.
With mortgage notes, your investment is backed by a physical property. It’s because a mortgage note is a promissory note secured by a mortgage.
This means, similar to a bank, the note owner has the right to take ownership of the property in the event the borrower defaults. You can foreclose and rent out or sell the property to recover your investment and any other expenses.
So, the real estate collateral adds significant security, making mortgage note investing an attractive strategy, even for experienced investors.
In our next post, we’re going to talk about different ways to invest in mortgage notes. So, stay tuned!
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