Private real estate notes (aka, loans) are basic IOU’s from a borrower secured by a piece of real estate. So, instead of going to a bank for loan, a real estate investor (aka, borrower) will come to you.
You can lend the borrower all or some of the money they need to buy a property.
Just like they would a bank, a borrower pays you monthly interest.
Once the project is completed, the note is paid in full. “In full” means the borrower pays you back the full amount of the loan PLUS interest.
Congratulations! You just made more money in a safer way and in a shorter timeframe than you would’ve in the rocky stock market or other traditional methods (i.e. bonds, CDs, annuities).
Now, let’s dig in a little deeper…
Private real estate notes (or loans) are basic IOU’s from a borrower secured by a piece of real estate. They’re similar to the mortgage you have on your home…only now you’re the lender and receive the interest payments.
However, unlike your typical mortgage company, these loans come with better returns, more security, and the added bonus of making a positive impact on your community.
A proper private real estate note is secured against a property with a lien called a mortgage or deed of trust (depending on what state you’re located in).
So, instead of the borrower going to a bank for a loan, they come to you. You lend them the money and you receive the payments.
The difference here is you cut out the middleman who takes most of the profit: the