Performing Notes or Landlord???

6 Replies

Hello investors!

I like to think of 2015 as the year of passive income.  the real question is do I become a landlord using strict investment strategies (low price multi units that can cash flow on average at least $1000 a month) or invest in performing notes. Im interested to know what you guys think, any note investors out there? If so what are your thoughts, landlords????

Damon, those are very different options.

"Low price multi units" are not friendly to "the year of passive income"

Probably the biggest difference is your comfort with leverage.  Notes are very hard to leverage.  Landlording is easier to leverage. 

Notes are less friendly if you make mistakes and usually take more experience.  

Good luck.

@Steve that makes sense, how do you feel about investing in performing notes?

I much prefer buying rentals at a discount and renting them out.  But I started with very little money and got pretty good at leverage.  

If I bought notes, I would buy quite a few and attempt to get non-performing notes re-performing.  

If you have a large pile of cash, buying already re-performing notes might be something to look into.  

I've been a landlord for about 8 years now and prefer buying both performing and non performing notes. Much less liability and complexity. More importantly, my borrowers never call me when their toilet is clogged or the roof is leaking, yet I still get monthly cash flow from that asset. Go figure.

Damon,

This comes down to the question of what are you trying to achieve at the end. If you are only interested in the cash flow, then notes will give you that with less hassle. The entry barrier is somewhat higher though. Landlording, on the other hand, may be less lucrative cash-wise but allows you to build equity on someone's else dime, which you could later use as leverage. So it is more about your medium-to-long term goals

Cheers,
Josh

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