Are you a real estate investor looking at investing in mortgage notes? If so, you might be wondering how to avoid going broke buying real estate notes. After all, notes are a simple, fun way to invest in real estate without a lot of the downside and headaches that other investors experience. Keep reading to find out the answer…
We meet a lot of investors. Some are just dipping their toe into the ocean of note investing – they might have questions or are even skeptical about how it all works. But many investors are the complete opposite – they love investing in notes and go all-in… sometimes even investing “too much” (for them) in notes.
If you’re a note investor (or you want to be) and you’re worried about this happening to you, here’s how to avoid going broke buying real estate notes.
How To Avoid Going Broke Buying Real Estate Notes
#1. Set A Limit Of Money You Can Invest
Maybe you have some money set aside that you can invest. Keep in mind that you have other expenses too, and you should always be able to cover your expenses in any case. After all, you’re probably investing to take care of your loved ones, so doesn’t it make sense to make sure you take care of your family even before your investments provide a much needed return? Set a hard limit and hold yourself to it with self-discipline. If you’re worried that you won’t be able to hold yourself to your limit then get a trusted friend to help hold you accountable.
#2. Get Cash Flowing Notes Only (Performing Notes)
One way to ensure you don’t go broke buying notes is to invest in cash flowing notes or performing notes. That way, even if you spend a large amount of your investable capital on notes, they’ll put cash back in your pocket. This will reduce the possibility of going broke or in the red because you are generating an income from your mortgage notes.
#3. Only Invest A Certain Percentage Of Your Income
If you’ve invested some or all of your existing capital, and you still want to invest in more promissory notes, then set a certain percentage of your income for notes and don’t go over that percentage. If you set aside some money and it’s not enough to buy a note then keep accumulating the money, paycheck after paycheck, until you’ve saved enough.
Summary
In any case, if you’re going to go broke buying something, it’s probably better to buy investments! However, we would never suggest you go broke buying real estate notes because you likely have other responsibilities. Therefore, follow these 3 strategies to help you avoid spending too much money when buying real estate notes.
If you want to see what real estate notes are available to invest in, you’ll love our selection of available notes. So just reach out to us by phone at (800) 953-2124 or by clicking here to fill out the form. We’ll be in touch and make sure that you get access to our list of available performing and non-performing notes.