The vast majority of American investors — especially Individual Retirement Account (IRA) investors — have a significant portion of their investment capital in the stock market, either through direct investment in the stock (or bonds) of one or more particular companies, or through investments in mutual funds.
Stock market investments can sometimes yield very respectable returns. Other times the returns are less than impressive; it is even possible for a company’s stock to decline in value to the extent that it becomes essentially worthless. Although some have devised elaborate methods which attempt to predict how a particular stock will perform, the hard truth is that no one can accurately and consistently predict how a stock or group of stocks will perform over the long-term.
Although investments in stocks are technically classified as “equity” ownership in a company, as opposed to “debt” that is owed by the company to the investor, as represented by bonds, the reality is that because investments in both stocks and bonds are unsecured — the investor cannot foreclose on any asset if the company does not repay the investor — investments in both stocks and bonds are, as a practical matter, little more than loans to the company in which one is investing. If the company does not return the investor’s capital (not to mention a profit), there is little, if anything, the investor can do to recover the invested funds.
Many stock market investors recognize that real estate can be a safe — and more profitable — investment, as compared to the stock market. But most of these investors, understandably, have absolutely no interest in being a landlord or in playing the lead role in their own, personal version of “Flip That House.” They simply want secure, passive investments that will earn a good returns.
Private Real Estate Lending may be the answer for these investors.
Private Real Estate Lending, as that term is used here, refers to an investor who, instead of investing in the stock (or bond) market, loans investment capital for use in one or more real estate transactions.
The way it works is simple: “Real estate deals” are a real estate investor’s “Inventory.” A Private Real Estate Lender loans the Investor money to purchase Inventory; the Investor gives the Private Real Estate Lender a fully-collateralized, first position lien against that Inventory, as security for repayment (as compared to the fully unsecured investments in the stock or bond market); the Investor sells the Inventory for more than the purchase price; and the Private Real Estate Lender gets repaid.
Both the Private Real Estate Lender and the Investor make money: the Private Real Estate Lender earns interest on the amount loaned and receives a return of the invested capital; the investor earns a profit on the sale of the inventory.
If you would like more information on becoming a Private Real Estate Lender, please click the link below to contact us.
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The material contained in this communication is for educational purposes only; it is not, and shall not constitute investment advice; and is not a representation, guarantee, or promise of the results you may experience. Please consult with the independent professionals of your choice, should you need or desire legal, tax, investment, or other professional advice.
The material contained in this communication is not, and shall not under any circumstance or for any purpose, be considered as a solicitation or offer to buy or sell any security or security-related product, instrument, service or investment, and is not intended for distribution or use in any jurisdiction where such distribution or use would be contrary to, or in violation of, the law of said jurisdiction, or where such distribution or use would subject The Note Company or any related entity or person to any registration requirement of, or personal jurisdiction in, said jurisdiction.
The Note Company is a Texas-based national Real Estate Note Investment Firm that helps Private Lenders and other investors reposition investment capital from under-performing uses to investments that are secured by real estate.