How involved is investing in performing notes?

Question

I started a thread a few days ago called Real Estate Investing strategies without tenants/landlording? and people suggested that I look into performing notes.

I've done some preliminary reading and am getting mixed messages. Some people say A LOT of education is required, many steps, many moving parts, lots of phone calls and legal documents and entities. Others say it's nice passive income.

Is is a very time consuming form of investing? I don't mind doing research, but am wondering if I'd be getting myself into something crazy.

Also, where should I start? Are there any books or sites I can read to get the basics and step by step process down? I haven't found any good guides to doing this type of investing.

Darren Eady · Answer

@Jeff L.

Performing and Non-performing notes are at the opposite ends of the Active-Passive spectrum.  Performing notes can be total mailbox money and non-performing notes require significant time to perfect a property that you might get back damaged and vacant (but hopefully with a lot of equity).  If you are starting off in notes ONLY buy performing notes - at least that's my humble opinion!

Daria B. · Answer

@Jeff L.

I am a Note investor, began last year with an experienced JV partner. I consider myself semi passive. What I mean by that is, the JV takes care of all the moving parts (lots to do so I won't list here) and I'm learning as we go through this and I pick my Notes that I want to buy. This is of course with some help from my partner. You will find a lot of people do this until they go on their own, if they want to.

I have a good understanding of what I am buying and what my buying criteria is for the Note. I attend monthly REI meetings devoted to Notes and a once a month Mastermind for more Notes discussion and networking.

For those who journey down this path that are active, they do a whole lot of research on a Note(s) and also have a servicing company when they buy to manage the payments, contact with the boworrer(s), a company to hold all the documents (Collateral file) like assignments, note, etc. So this means they need to vet the servicing and document companies but, I won't say more important but just as, all the research going into buying the Note.

I feel I'm leaving out information to explain this to but because it's so much it would likely do you better justice to have a conversation with one of these guys.

@Dave Van Horn and @Scott Carson.

I just attended my first NoteCamp that Scott Carson does since I felt I had learned enough on my own for the past year to branch out and get some more education and meet other advanced Note-ers :-)

Jeff L. · Answer

Thank you all for replying! I'm reading a lot of articles and watching a few webinars now. I think I have more of a grasp of what this strategy is now.

What kind of return can you expect for typical performing notes?

Bob Malecki · Answer

Hi @Jeff L., PM me and I'll send you my recommendations for reading and conferences.

Bob

Christopher Winkler · Answer

There is nothing more strenuous than walking to the mail box, or checking your online direct deposit to get your checks. Its when they STOP paying the fun begins...

Daria B. · Answer

@Dave Van Horn

@Scott Carson

Tried to tag you guys but it did not work in the thread.

Jay Raught · Answer

It depends on whether or not you invest in Non-performing or performing notes.  NPN's are involved,  PN are not.   There area few books... check here for more info.. https://www.biggerpockets.com/forums/70/topics/411915-where-to-find-education-on-notes

How involved is investing in performing notes?

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