Crowd Sourced Notes™ are Redefining Relationship Investing
Crowds are coming together and redefining Relationship Investing. Relationship Investing has been historically known to be practiced by large asset management firms. It was defined as, essentially, providing capital to public companies to fund initiatives such as expansion, transitions, deleveraging balance sheets, transition shareholders, and other strategic purposes in order to help make the company stronger.
Today, Relationship Investing is becoming about groups of people, crowds, which are coming together leveraging their monies to be able to purchase larger portfolios of assets. Often times, by sourcing these assets with the power and resources of a crowd they can obtain additional discounts. Additional discounts allow the crowds to increase their purchasing power by allowing them to source more assets, provide greater yields, and provide more protection.
Notes as Crowd Sourced Assets
A Note is the term commonly used for a Mortgage or Deed of Trust. A Promissory Note is a “Promise to Pay” that a Borrower signs and is then subsequently recorded as a lien on the home until that Note is paid in full. The lien is not removed until the Note is paid, which provides tremendous protection because if the note is not paid then the home can be acquired as an asset. Borrowers of Mortgage notes are incented to make their payments to stay in their home. It is not commonly known that crowds are coming together to source mortgage notes or what is called, “Crowd Sourced Notes™.” Yet, it can be done!
Real estate appreciation values go through cycles, which means real estate values rise and fall – as we saw in 2008. However, real estate is considered to be one of the safest investments anyone can make, and in the last decade we have seen great appreciation in almost every market. Real estate is a much less volatile industry than say the stock market and, according to industry reports, the number of U. S. households will increase by an average of 13.5 million between 2015 and 2025.
Notes are backed with collateral – the real estate; and the mortgage note crowd sourcer can transparently conduct due diligence by looking at several factors influencing the value: neighborhood, age of the property, etc., and can further influence the value of a home by fixing it up. In the event the property is repossessed, it can be sold, rented, or made a vacation rental – among other options. Most other assets do not have all these opportunities. In addition, because it is likely that the Borrower will pay their note, the crowd does not have the headaches of dealing with tenants, rehabs, etc., and therefore the investment is hassle free. Crowd Sourced Notes™ truly becomes passive income for the members of the crowd.
Crowd Sourcing Can Provide More Protection
Diversification
Crowd sourcing a larger number of notes in a portfolio can be done, and a larger number of notes means the risk is further reduced through diversification in the following areas:
- Where the home is physically located
- The size of the home
- The price of the home
- The number of homes the notes represent
- The Borrower Profile
Protecting for the Downturn by Buying at a Discount
By leveraging a larger amount of money put together by a crowd can also allow the crowd sourcer to buy notes at a discount. Buying at a discount not only increases the yields the crowd is able to make on the notes, but it also protects in a downturn of a real estate market by providing more equity between the purchase price of the note and the fair market value of the home. If the market goes down the equity of the real estate may collapse, but the amount paid for the note by the crowd is mostly, if not completely, protected. The more discount the crowd can negotiate with their sourcing power, the more they are protected.
Conclusion
Crowd Sourced Notes™ offers the crowd coming together to source more assets, provide greater yields and more protection. While there are many investment options these days, Notes meet the following criteria:
- Secured by real estate
- Hassle-free – passive income
- Asset can be recovered (if necessary)
- Can provide diversification for the crowd
- Less volatile, more stable than many other investments
- No Brokerage Fees
- Underlying asset insured with Borrowers homeowner’s insurance
- Can protect against a downturn in the market
THIS IS NOT AN OFFER TO SELL SECURITIES. No securities offering is contemplated herein. Offers for securities are made through a Private Placement Memorandum provided by Company management only.
About Crowd Sourced Notes™
Michele and Dave Garbus own Real Property Financial along with associated firms, Silent Running LP and Aerial Funding LLC. Their passion is introducing individuals to the value of mortgage notes. Real Property Financial simplifies the complexities of owning and managing real estate mortgage notes. The firm has been providing information, education and tools on how to evaluate a note, assess the risk, work with borrowers and account for the return, since its inception in 2006. Based in Evergreen, Colorado the experts at Real Property Financial have purchased an assortment of more than 500 mortgage notes. Known for creating a winning environment for borrower, lender and investor, Property Financial can help make real estate mortgage note investments long-term financial solutions.
comfortable way of life, and a worry-free retirement. What we got instead was the loss of an obscene amount of money, scams and exorbitant fees. We decided to take back the control, learn from their mistakes, and get real estate backed investments while applying the principles that resulted in returns common to financial institutions. Real estate mortgage lenders buy and sell real estate mortgage notes regularly and for various reasons. Since 2003, our firms provide all the tools, understanding, and know how to evaluate the value of a real estate mortgage note. During our career, we have successfully managed 500+ mortgage notes. Our highly skilled team verifies authenticity and data, and provides services to work with Borrower(s), or in the case of foreclosure, the rehabilitation to sell or rent the home. With the proper due diligence and resources, a real estate mortgage note can be purchased below the market value of the real estate. When bought correctly, a real estate mortgage note can be profitable.