Buying mortgage notes or storage space?

Question

How do these two rate as first time investments?

Dmitriy Fomichenko · Answer

@Mark Eichenlaub

I think that mortgage notes can be great way to get started, and to continue. Actually for me personally that is how I invest majority of my retirement funds. I like it for 3 main reasons:

1. Completely passive investment

2. Low risk - your investment is secured by real property (I usually stay at around 60% CLTV)

3. Nice returns - all of my notes produce double digit returns

What do you mean by "storage space"? Are you referring to self storage facilities? If so - you could invest in a self-storage fund but doing one on your own will require quite a bit of capital and probably not be suitable for your first investment.

Scott Krone · Answer

@Mark Eichenlaub - they are two entirely different investment classes.  I have associates who invest in notes but are transitioning and building a self storage portfolio.   I agree with @Taylor L. position regarding your goals and challenges.

Having done both, I prefer self storage.  As much as it is a real estate investment it also has a retail and technology component to it.  Having studied self storage's performance over the last four major recessions, I noted it as Recessionary Resistant, while others go further and describe it as Recessionary Proof.  On the other hand, notes tend to be more cyclical in nature.

Taylor L. · Answer

They're both great asset classes. The bigger question is which makes more sense for you? What fits your strategy better, active or passive investments? There are fund and syndication options that will get you into either asset class passively. Or you can build an investment business for yourself, if you want to go the more active route.

Buying mortgage notes or storage space?

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