Here I briefly explain why I investing in mortgage notes is better than investing in rental real estate. Notes are very passive, steady income, no repairs, no maintenance, no tenant calls, little to no liability, more liquid (can sell faster to get your money back if need be), very scalable and less cost to manage the asset. A list of 13 advantages of notes are below:
Passive - Servicer collects payment and sends you check.
Steady and consistent income - get checks for 30 years.
No repairs or maintenance - Have you ever called your lender to come fix your toilet?
No tenants - No turnover, evictions or chasing rent.
No liability - No worries if a homeowner slips and falls.
Secured - the investment is secured by real estate.
Insured - unlike a stock, the collateral (property) is insured.
No taxes and Insurance - Homeowner pays and TI is typically escrowed with the servicing company so no need to track.
Notes are typically more liquid than rental real estate.
Consistently higher returns - Typically double digit.
Scalable - easier to manage several hundred notes versus several hundred rental properties.
No HOA or COA - homeowners must pay directly.
No property management costs - instead we pay a fraction to a servicing company to collect payments.
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