@Gautam Venkatesan,
I don't know much about notes, but it seems that a portfolio of notes and single family homes may be a good path to go. I have interviewed several successful commercial brokers in my area and one of the questions I always ask them is what their retirement portfolio looks like. I was very surprised to hear that none of them own commercial real estate within their buy and hold investments. Many owned single family home rentals, multi-family, and few very successful ones owned an apartment. I asked them why they sell commercial properties and do not own any commercial themselves and their response was, "Commercial real estate is most sensitive to the economic downturn in the market. If we have another melt down like we had from 2007-2009, commercial will get crushed, but everyone needs a roof over their heads even during recessionary times. That is why I like to sell commercial for the fat commission but like hold residential for my passive income portfolio.
One DFW investor I met through BP has a portfolio of single family homes Multi family like
@Steve Vaughan and he is already there at $100k passive income. He seems to be very happy and doing well with his retirement portfolio. He has couple that he owns free and clear and some that are still mortgaged. His goal is to eventually own all his investment properties free and clear. He told me about an older couple he knows in the DFW area who owns 40 single family homes in the Dallas Fort Worth area who generates almost a million dollars in passive income. Their strategy is really simple of buying distressed, fixing them up to look very nice and new, then leasing them to quality tenants. I feel very strongly the Single Families, multi-family, and apartments are the best asset classes for an income retirement for an individual investor. I would say that one slight advantage of SFH over multi and apartment is that you are most likely dealing with an investor on the side when purchasing an multi or an apartment investment where the owner maybe a very savvy negotiator, perhaps even more savvy that you. However, when you are purchasing single family homes, you are dealing with a retail seller who may not be very sophisticated in terms of negotiating. You can also diversify with SFH by buying in different streets, different sizes, and different neighborhoods
I really like the old couple model in DFW and would love to follow this path. Hopefully when am in my 60s I will also own 40 single family homes in Atlanta while vacationing in the Carribeans, Europe and Asia. Finding high quality tenants and lease contracts for single family homes is just very easy and intuitive for me to understand. Selecting the right tenants for SFH will pretty much remove 95% of the problems. Trying to find tenants for retail, office, and industrial is just a whole different learning curve that will increase my risk.
Finally, what I realize as real estate broker, the more buy and hold rentals I own, the more my earned income will be shielded from taxes. I am just amazed by how 9 out of 10 real estate agents and brokers I meet do own any rental properties. I believe that every real estate agent should own rental properties solely for purposes to shield their income as the more money you make as an real estate agent / broker, the more tax shielding you will need.
