When looking at investing in real estate, the great bulk of attention is focused on the buying, selling, and renting of the property.  But double digit returns can be made from financing the purchase of the property through private mortgage notes.double digit investment returns 

As proof of how well investing in the financing of transactions can be, in a recent Forbes article, “Trophy Homes: Sand Castles,” which listed the owners of the most exclusive address in the Hamptons, Meadow Lanes, Andrew Stone, a “mortgage investor,” was listed as the owner of $21.9 million, 10,640-square foot beach house with 10 bedrooms, 12 bathrooms, a guest house, swimming pool, and tennis courts.

“I am surprised that only one owner was listed who invested in mortgages,” commented Shaun Cohen, President of Equity Finance, the funding arm of EquityBuild, a real estate investment firm.  “Private mortgage note financing has generated historic returns of 12%...that means your money doubles every twelve year.  Compounding that stake will soon make the investor “Meadow Lane” wealthy, whether they do it through financing individual transactions or buying into a mortgage pool to underwrite a variety of loans.”

Cohen furthered, "There are many advantages to private mortgage note financing, no matter if it as part of a syndicate or funding a selected loan.  You cannot beat the flexibility: the terms are set between the borrower and the lender.  With that, there is much you can do to lower taxes, as an example.  If you want the private mortgage note to finance your retirement, you can arrange so the payments kick in after you quit working.  It can also be held in your retirement account, too."

About the retirement account option, Cohen noted that, "Many think that an IRA or 401K restricts flexibility.  That is not true for private mortgage note financing or other types of real estate investing.  If you sell a real estate asset in your retirement account, the capital gains are tax free.  For that to happen otherwise, the funds have to be rolled over into another like kind property as part of a 1031 transaction.  Here is just one example of how real estate investing is more flexible when the asset is part of a retirement account, be it the property itself or a private mortgage note.  With a $21.9 million vacation home on the Hamptons, Mr. Stein has clearly demonstrated how lucrative mortgage investing can be for an individual."

Concluding, Cohen advised that, "Over the last two centuries, about 90% of the millionaires have come from real estate gains.  During The Great Recession, as stocks and bonds fell, rental income actually rose.  Two hundred years is old school, The Great Recession is today: no matter what the time period, real estate is still the greatest creator of wealth for individual investors!"

Private Lending, at EquityBuild