Mortgage Notes and Note Investing offer solid returns to grow — and double your money.
When you consider all the options available to grow your money, the best option may not even be on your radar. We are not talking about stocks, bonds, mutual funds, or precious metals — we are talking about mortgage notes and note investing! They are a great way to double your returns in a surprisingly short amount of time.
Note Investing is a Huge Business
Last year over $25 billion in private mortgages were created outside of typical banks and mortgage companies. Many of these mortgage notes are secured by middle-class homes selling for $50,000 to $100,000. Home sellers often finance the sale of their property as a way to create low-risk, steady income for years to come. Many of these seller-financed notes are later sold when the note holders decide they want their money all at once. These “seasoned” notes come with a reliable payment history and at least years of having a favorable loan-to-value ratio. Investors can look at these seasoned notes as a way to conservatively double in their value in ten years.
Mortgage Notes Can Grow Your Investment Exponentially
Let us say you start by buying five notes for a total of $235,663. Let us also assume that your initial rate of return is approximately 6%. At that rate, your notes will produce $2,193.95 per month.
By reinvesting and not spending those proceeds, you will have $48,705.69 within 22 months and will be able to buy another note. That note will increase your monthly income to $2,632.74 and enable you to buy another note in 20 months.
Continuing this retaining and reinvesting the proceeds will enable you to buy additional notes more quickly. In ten years, your note portfolio will be generating $5,704.27 per month without further investment. It will have increased in value to over $527,129.74. This is passive “set it and forget it” income, and it’s perfect for building long-term wealth.
Tax-Free Earnings From Note Investing Using Your Self-Directed IRA
Note investing is an excellent strategy for utilizing funds from your Self-Directed IRA. Proceeds accumulate more quickly since they are tax-free, with taxes only being paid as you withdraw funds from your account. By using a Roth IRA, the returns are entirely tax-free.
By the way, since you own the note and not the property, you won’t have to drain your investment by paying for insurance, property taxes, or repairs the way landlords do.
A reinvestment strategy like this is one of the best ways to build stable, predictable, long-term wealth. If you don’t already have one, we can gladly help you get a Self-Directed IRA started right away. Once set up, we will explain more about the mortgage notes’ wealth-building potential.