It is obvious passive investors tend to earn much better as compared to professionals in stocks, bonds, mutual funds, etc. For those who have just started running their passive investing business, it is time you plunge into the depths of the profession, know the ‘enters’ and ‘exits’ in a transaction, and above all—your investment personality. After this you will be qualified enough to capitalize on other opportunities.
A great way to initiate your business is by acquiring help from experienced professionals or top firms like Capital Concepts who are already in the business of lending capital to investors. So let’s review how working with another lender in Dallas TX can help you in recognizing different methods to invest in loans including the three below.
1. New Loans
A new loan can be the purchase or construction of a new property, renovation or rehab of an existing one, and/or refinancing a debt. In new loans, you are specifically lending capital to a single borrower while having hold over documentation requirements, terms and conditions, servicing aspects, etc. You won’t be held liable for the pervious originator’s or servicer’s shortcomings. If this loan is directed to a previous client, you have the previous performance history at hand to review.
2. Buy Notes
Passive investors can also buy loans that have already been initiated. When you acquire a loan from a private money lender which is either performing or non-performing, it can be bought at a discount or a face value. While if it is a high-yielding loan, it can also be purchased at a premium.
A benefit about buying notes is there is always a performance history available that can be evaluated and studied. In the case of non-performing loans, a mixture of authentic collateral valuations and great discounts at purchase can offer some healthy returns for an investor who is willingly anticipating a foreclosure. However, some non-performing notes can either payoff in order to avoid foreclosure or be restructured to come as a promising note in the future.
3. Loan Pools
Investing in a pool of loans is another method through which you purchase a group of loans in a single transaction. A major benefit of acquiring loans in bulk is the promise of getting a much better discount. As for performing loans, again there are ready-made performance histories available to evaluate.