The mortgage note space is growing in popularity as an investment. What’s driving this new surge among experienced investors?
The mortgage note investment space really began to explode and be pioneered for private investors in the wake of 2008. Learn more about this in the book Turning Distress Into Success.
While this wave certainly brought more individual investors and small real estate ventures in this space, it has only grown in popularity. Over the past year we’ve specifically seen more demand as experienced real estate investors and firms, as well as Wall Street have moved more of their attention to this sector.
So, what’s driving this shift?
Strong Risk Adjusted Returns
Mortgage note investments can offer high investment returns, while being backed by solid collateral. A combination that is especially beneficial in an environment when strong risk adjusted returns are so rare.
Passive Income & Wealth Building
Even experienced active investors and operators are finding that their other strategies lack true passivity. Once you mature to a certain stage, and see some success, it just makes more sense to start actually enjoying life, and let your money work for you. Don’t have to wait to put this in play for yourself either!
Many who previously focused on active investing, or trying to work all sides of the equation running a real estate or private equity business are now starting funds to benefit from the work of other funds and experts. They can focus on raising capital, then invest that with the best operators in the business, while profiting from the margins and spreads.
The mortgage note space may be gaining in popularity right now, but is far less competitive than retail homes, multifamily apartments, or the loan origination market.
That means better value investments that others are able to gain access to. In fact, to get the really good deals in this space you must have reputation, connections, track record and financial strength. Or you can at least participate through a fund that does.
Multiple Ways To Participate
Not only are there a variety of investment strategies to apply here, but there are multiple ways to participate, depending on your skills, goals and interests. You can start your own fund, get involved in directly buying notes, or choosing passive investing in a fund.
Find out more about investing in secured debt and real estate, go to NNG Capital Fund