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Zen and the Art of Real Estate Investing with Jonathan Greene

Taking Note of New Investment Opportunities with Fred Moskowitz

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Real estate investing is often associated with owning rental properties, multi-family units, or commercial buildings. However, there are many other investment vehicles in the world of real estate investing. Learning about and understanding them can diversify and enhance your investing career.

One alternative investment is mortgage note investing. In this episode of Zen and the Art of Real Estate Investing, alternative investor Fred Moskowitz shares his expertise. Fred, a public speaker, entrepreneur, and author of The Little Green Book of Note Investing, explains how he landed in mortgage note investing following a stint in computer engineering and why it isn’t as complicated as it might seem. Investing in mortgage notes allows you to diversify your portfolio without the liability and work of managing properties.

Fred reveals his tips on investing alternatives and advice for investors who want to diversify. You’ll also hear: 

  • Note funds are created when a fund manager raises capital through a private placement offering. The fund manager then takes the capital to the secondary market and buys mortgage notes in bulk. That allows them to negotiate a better discount, and you get better access to the notes. If you’re a passive investor, a fund manager is leveraging their experience and relationships in exchange for a return on their investment. It operates in a manner much like real estate syndication.

  • You can evaluate a mortgage note by figuring out its yield. Essentially, you’re purchasing a payment stream. For instance, you can buy a $100,000, 30-year mortgage at a 6% fixed rate for the discounted rate of $90,000. While the interest rate will be slightly higher for the $90,000, if the loan is paid off in six months, it’s paid off at the full $100,000. The rest comes in as an upside in capital gains to the lender.

  • Note-servicing companies can manage your mortgage notes and handle the daily activities that come with holding notes, like collecting borrower payments, tracking the amortization schedule, and managing the accounting for the notes. They can also take calls from borrowers or generate tax statements at year’s end. In many ways, it’s very similar to property management.

 

To hear more of Fred’s vast knowledge surrounding alternative real estate investments, tune in to this episode!

If you want to learn more about Zen and the Art of Real Estate Investing Podcast, check out http://www.trustgreene.com/podcast/zen/041

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