Sometimes the headline says it all: "Invest in Real Estate" blared a recent article in Kiplinger's, the personal finance magazine.  As the piece noted, "Investment Fads come and go, but this much is certain: People will always need a place to live."  An excellent way to profit from that for those who do not want to actually own real estate is investing in private mortgage notes.

 Private mortgages are loans from an investor or a group to those looking to buy property.  While an individual can finance a single transaction, it is far wiser to passively invest in a syndicate with others.  From that, risk mitigation is actuated from the diversity of the real estate being financed.

Passively investing in private mortgage notes benefits from the experience of others.  Experience manifests itself in superior results.  For private mortgage notes, these are generally in the double digits.  Defaults on private money lending in real estate is very low, even zero if done well.  Such a combination makes high yield real estate investing in private mortgage notes very appealing.

There are many other features of private mortgage notes that are attractive to those considering some form of real estate investing.  

The flexibility of private mortgage notes is unmatched.  So long as the terms are legal, the lender and borrower can structure the agreement so it best meets the needs of both parties.  That makes private mortgage notes ideal for financing a wide range of needs.  As an example, if retirement income is desired, the private mortgage could have a long term.  Or there could be small payments, such as interest only, in the initial stages of the private mortgage note that increase in the latter stages.

In addition to being more flexible, private mortgage notes are less demanding than other types of real estate investing.  Actually owning investment property requires substantial amounts of time and money. Tenants have to be found, repairs have to be made, and all aspect of the properties owned have to be managed.  That is why it is best to passively invest in the real estate sector.

Private mortgage notes can also be held in a retirement account, such as an individual retirement account (IRA).  That results in any income or capital gains from the private mortgage note being tax free.  The interest income from the private mortgage note is not taxed.  Should the private mortgage note be sold for a profit, there are no taxes on the gains, either, when it is part of a retirement account.  As part of a retirement account, the overall return of a private mortgage note is greatly increased.

 With a 12% return and no defaults, private mortgage notes prove demonstrably why it is so profitable to "Invest in Real Estate."