"Housing Play the Rebound"  was the title of an article by Lisa Gibbs in the Investment Guide 2013 issue of Money magazine that sought to inform readers of the various ways to profit from the surging real estate market in the United States.

 

Financing private mortgage notes is a proven way to produce double digit returns in high yield real estate investing. Private mortgage notes are the loans from an individual or group to finance the purchase of real estate for another party.  This is very much in demand as traditional lenders such as banks, credit unions, and mortgage brokers have made it much more difficult to obtain financing since The Great Recession.  That is true even with the "rebound" in housing that Gibbs details in her excellent Money magazine piece. As a result, there tremendous opportunities to profit from investing in private mortgage notes.

Passive investing with a long term approach is the best way to profit with private mortgage notes.  Individuals can finance single transactions, but that is very risky.  It is far wiser, and more lucrative, to invest with others in a pool that finances a wide range of properties.  Diversity from the real estate being underwritten provides protection.

Investing with experienced professionals such as Shaun Cohen, President of EquityBuild Finance, is also highly recommended.  In a recent webinar, Cohen pointed out that private mortgage investors were realizing a return of 12 percent with EquityBuild Finance, the funding arm of EquityBuild, a real estate investment firm.  In addition to the double digit returns, not a single property had gone into foreclosure.  

EquityBuild Finance has obviously been providing its private mortgage note investors with a very high yield with a very low risk!

Obviously, there is a risk to private mortgage notes, as there is with any investment.  A proven way to reduce risks is to only finance short term private mortgage notes.  By doing so, the capital will be returned sooner, along with the interest income.  From there, the proceeds can be rolled over, time and time again, into new private mortgage note opportunities.

To enhance the return for real estate investing with private mortgage notes, retirement accounts are useful.  When assets are held in a retirement account such as an individual retirement account (IRA), the investment income and capital gains are tax free.  That means if the private mortgage note is sold for a profit, there are no taxes on the capital gains.  When held in retirement account, the investment income from a private mortgage note is not taxed, either.

The best private mortgage investments are those made with seasoned professionals like EquityBuild Finance.  Risk management is provided by the experience of the firm and the variety of assets financed.  The double digit returns from investing in private mortgage notes can make the "housing rebound" much more rewarding!