Investing in mortgage and TD
Question: Would someone please advise whether buying mortgage and trust deed is a good investment. If so, where can I get related information either on Internet or from other sources? Are there any specific publications or journals which have the current listings? Your information will be appreciated.
Answer: Yes, investing in mortgages and trust deeds CAN BE very rewarding. However, the security of the note/TD is of PRIME importance, as is the real estate (or whatever the collateral), so doing your homework is VERY important. I have an excellent business in finding these notes for others, as well as for myself, and this can be an excellent way to build your portfolio (or use it to invest a self directed IRA to defere gains). I can let you know more about where to find sources, and what to look for in an investment.I’ve been in banking/lending since 1983. If you want to become a banker and do this full time then go for it. I know private individuals that do well at it because it is their ONLY business.
The advantage is getting a little (emphasize little) better return on your fixed asset investment.
Most people who need to get a private mortgage/TD are horrible credit risks or they would already be signed up with a local lender. In today’s market the competition is hot for even marginal deals. The real way folks make money in private mortgages is to get as large a down payment as they can and then foreclose on the property the instant they can.
If you are prepared to go knock on doors the first of each month and ask for money from unpleasant folks you should consider the the idea.
Eventually, you will have to foreclose on a property – How many months are you willing to go with no income; The former owners will strip the place bare and let dogs shit all over carpets; you will have to fix the place up and pay a realtor a 7% commission; and the process starts over.
Another disadvantage is that your money it tied up for the life of the loan. Don’t expect to be able to sell the loan or borrow against it.
I am not trying to disuade you from investing. I just want you to go in with your eyes wide open. What you are really doing is buying yourself a job.
If you are just looking for some place to put some cash and get a good return without any headaches, then buy an investment grade bond or CD.
This is an interesting topic. Let me know what the details are.
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