What is a Note?

In the United States, a mortgage note (also known as a real estate lien note, borrower's note) is a promissory note secured by a specified mortgage loan; it is a written promise to repay a specified sum of money plus interest at a specified rate and length of time to fulfill the promise. While the mortgage deed or contract itself hypothecates or imposes a lien on the title to real property as security for a loan, the mortgage note states the amount of debt and the rate of interest, and obligates the borrower, who signs the note, personally responsible for repayment

 

Do I own the house?

This is the most asked question when it comes to investing in real estate notes. The simple answer is no, you do not own the home but rather the home is an instrument used as collateral. In case of default on the note you will get the home after foreclosure and can then resell or rent.

 

Mortgage Note vs Tax Lein?

The advantage of a mortgage note over a tax lien or tax deed certificate is that a mortgage note will allow one to collect the interest on a monthly basis. Tax lien and Tax deed certificates are only paid when the lien or deed is redeemed.

 

 Is it Safe?

All investments come with some kind of risk, however we feel that investing in real estate notes is a lot less risky than the stock market. When you invest in the stock market you have zero control over whether the stock goes up or down. When you invest in real estate notes if something goes wrong you can roll your sleeves up (or we can) and do something about it. If a stock goes bad you are at the mercy of the corporation. We have had a couple of notes go into default and have made money when we resold on every single one of them!

 

Is it like a rental?

Kinda… You are collecting monthly payments from someone living in the house. However, you do not own the home and the homeowner has to pay for all of their own repairs etc. No late night calls because the toilet is overflowing!

 

Rentals Vs Notes

From an investment standpoint a rental is risky like the stock market. You have up and down years in which you may make money or you may lose money. With a real estate note you know exactly what you are going to make month after month. Your net return does not change when taxes or insurance prices go up, as it is the homeowners responsibility to pay them.

 

Servicing

The Note Factory prides itself in servicing. The two things that separate us from the competition are realistic values and servicing. We have a highly trained staff that makes sure your investments are protected and performing at a high level. We also report to credit agencies so that the borrowers can begin to rebuild their credit and also so that they will pay on time.

 

Return

Each note is different but most of our investors realize double-digit returns.

 

Can I purchase from my Ira/401k?

Yes! About 80% of our investors purchase real estate notes through their IRA and or 401k. Our specialized team can help you get yours set up and start investing out of in a matter of weeks.

 

What is a self directed IRA?

A self-directed Individual Retirement Arrangement is an IRA that allows the account owner to direct the account trustee to make a broader range of investments than other types of IRAs. For example, Real Estate Notes.

 

What happens if they stop paying?

If they stop paying there are a couple of options.

  • Deed In Leui (they sign the house over to you)
  • Foreclosure- Texas is Non-Judicial and this process takes less than 2 months. We facilitate the entire process for you and resell the house once foreclosure proceedings are over.
  • We have created over 200 real estate notes and only had 7 go into default. The odds are in your favor, but if it does go into default our highly trained team is the best at getting your investment producing the stream of income again.

 

Did you check credit on the home buyers?

Absolutely. However, we have developed a proprietary character underwriting system that looks at the borrower as a whole not just their credit. This system has allowed us to have less than a 5% default rate on ALL notes created. Unmatched by our competitors!

 

Where are your notes located?

As of right now we are mainly in and around the San Antonio, Texas area.

 

I want to create my own notes. Can you teach me how?

Yes! Our partner, the American Wealth Academy, offers one on one year round training for those that wish to roll their sleeves up and do it themselves. Please visit their site or call Erik at 210-439-4471 to learn more.

 

How many notes have you created?

We have created over 200 notes.

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