The Perfect Note To Buy
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
7e investments53 Reviews
The Perfect Note To Buy
Most Popular Reply
Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes
2yAs a conservative investor, I love my “perfect notes “ that pay 9%. In more than 20 years I’ve never had a late payment or default. I buy notes when rates are relatively high and buy more properties when rates are low. I was able to retire the first time at 35 using this strategy.
32 Replies
- Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes2y
@Don Konipol, I just wrote a blog post (yet to be published) touching on these points, sort of. The gist being that diversifying amongst sponsors that all do the same thing in the same areas with similar financing, is barely diversifying your real estate LP equity positions.
To Chris's point: it all comes back to Econ 101 - there is no such thing as a free lunch.
Returns are simply the markets perception of risk. If you want higher returns, you need to take more risk. If you don't want to take risk, generally, you will not achieve outsized returns.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
Quote from @Evan Polaski:
@Don Konipol, I just wrote a blog post (yet to be published) touching on these points, sort of. The gist being that diversifying amongst sponsors that all do the same thing in the same areas with similar financing, is barely diversifying your real estate LP equity positions.
To Chris's point: it all comes back to Econ 101 - there is no such thing as a free lunch.
Returns are simply the markets perception of risk. If you want higher returns, you need to take more risk. If you don't want to take risk, generally, you will not achieve outsized returns.
100% agree. Saw someone on BP facebook page looking for sponsors providing 20% returns with only a 12 month hold. They might as well invest in bitcoin at that point or day trade.
7e investments53 Reviews - 2yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesCouldn’t agree more with both points. The main thing, imo, is PERCEIVED risk. A good to great investor perceives the risk reward ratio MORE ACCURATELY than does the general investing public - meaning the majority of investors in that particular market. Short term LUCK can prevail; over a longer term the mathematical “odds” begin to dominate the equation.
Quote from @Chris Seveney:
Quote from @Evan Polaski:
@Don Konipol, I just wrote a blog post (yet to be published) touching on these points, sort of. The gist being that diversifying amongst sponsors that all do the same thing in the same areas with similar financing, is barely diversifying your real estate LP equity positions.
To Chris's point: it all comes back to Econ 101 - there is no such thing as a free lunch.
Returns are simply the markets perception of risk. If you want higher returns, you need to take more risk. If you don't want to take risk, generally, you will not achieve outsized returns.
100% agree. Saw someone on BP facebook page looking for sponsors providing 20% returns with only a 12 month hold. They might as well invest in bitcoin at that point or day trade.
So, how does an investor learn to “perceive” risk \ reward more accurately than the general public, and hence increase their odds of obtaining greater returns and/or less risk? Well, first is education. The more knowledge someone possess about anything that could influence that investment whether micro or macro, the better or rather the more accurate his analysis will become. Second is experience, people who have never invested through a recession/depression have absolutely no idea that their investment could be totally wiped out - or worse if they have personal liability. Third is the toughest to acquire, most never do; the ABILITY to be able to not only make the proper decisions, but to execute those decisions at the right time. Numerous studies have shown people either err on the side of greed or on the side of fear, depending on their internal psyche and on the recent economic performance. We’ve all seen people who hold on to an investment forever waiting for it to get back to “breakeven”, they just can’t psychologically accept a loss. Opposite is the person who sells a great investment way too early because he can see nothing but “validation by profit”. If you grew up in a household with an unhealthy relationship to money it is even more difficult to overcome.
I have come to believe that we no longer live in a financial setting where someone with limited knowledge is able to invest in a few mutual funds and a couple of rental properties and forgot about them long term. Too much is going on worldwide for that to be a “safe” scenario. The opportunities, especially in real property investing, are probably greater than ever. However, so are the risks. What has worked for us the last 10 years may not work at all in the next 10. The only thing we can do is keep informed; keep learning; sharpen our investing skills; put the time in to be able to answer most investment questions, and have confidence in the long term viability of our investment strategies.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.