June 18, 2024


Mad about real estate

Real Estate Investment Notes – Hot Trend for Cool Times

The newest ‘buzzword’ to hit the world of real estate investment is: Real Estate Investment Notes. Now, property notes themselves aren’t new, in fact they have been around almost as long as realty itself. But, the ‘awareness’ of them as “viable investment vehicles” is a new trend that is a direct result of recent “cooling” happening in the realty market in parts of the country. Property backed notes are a dose of “hot” in recent “cool” times.

Smart investors always keep a close “eye” out for any changes in the market and “act” quickly to make the wise investment decisions necessary to avoid ‘disastrous’ financial losses. You too can benefit from what these “investment-gurus” have come to know about real estate backed notes and stretch your profits/gains a little further if they are generated inside a self directed IRA or self directed 401k.

Passive Cash Flow

Real Estate notes may have a high rate of return if structured properly, and are more secure than most other well-known investment strategies. A real property note is an investor instrument that can be used to earn what has been coined as “passive-income” or “passive cash flow”. Simply put, this means you will earn ‘dividends’ on your investments in real estate notes without having to do much else other than writing a check for your note and voila the money starts flowing in month after month like clockwork. Not bad, but it gets better. Since the money is earned passively through a real estate, you benefit again at tax time. Gains earned by property notes are taxed at low long term (currently at this writing) 15{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} capital gains tax rates. Do you know of any other investment strategy that allows you to make money passively and at a flat 15{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} tax rate? Nothing like real property notes has “hit” the realty world yet where you can make money passively, so until or unless it does, notes are the way to go if you want to put real cash and profit into your pocket month after month, year after year.

If you prefer watching your vested interests grow without any help on your part, then propery notes could be a great alternative for your portfolio. If any ‘cosmetic’ or “functional’ “improvements” are made to the real property listed on your real estate note it can really ‘pump’ up the value of your note to new heights. This will not only increase the dividend-earning potential of your note, but also it works to your benefit should you want to sell off a portion of it, or sell the note off “completely” because it’s increased value will put more money in your pocket. You can use your “windfall’ to re-invest in more opportunities or use a portion of it to fund a college education for your child.


Unlike selling real property, notes have built in liquidity. In most cases, you don’t have worry that if you “hold” a real property note and wanted to sell it quickly, that it would be hard to find buyers for it. Wise investors are always looking to “buy” more real estate notes with positive cash flows because they know what valuable, income-earning vehicles they are.

Self Directed 401k / IRA Notes:

Did you know you can use your 401K or self directed IRA retirement accounts that you either implemented through an employee-employer plan, or opened up yourself, to fund the purchasing of real property notes? Many people are “tapping” into their retirement accounts because they have learned that real estate notes offer them the ability to increase the benefits usually earned through such retirement accounts, securely and reliably.

Will you be among the ‘wisest’ of investors and look into the “viability” of real estate notes as an investment strategy to best increase the dividend-earning power of your retirement money? A well-researched person will utilize the Internet and companies to calibrate opportunities. The Internet may provide you with access to all of the information you need to learn how real property notes can help you to “retire-in-style” minimizing “risks’ unlike so many of the other investment opportunities today.

The benefits of land backed notes are as follows:

1. Generate passive income.

2. Are secured by real property.

3. Are taxed at low long term capital gains of 15{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4}.

4. Can be purchased with a self directed 401k or self directed IRA.

Another quick note about investment gains earned inside an IRA or 401k:

Gains earned and tucked back into the IRA/401k are earned on a tax-deferred basis and are taxed at ordinary income tax rates at the time of distribution starting at the age of 59 1/2. Gains earned off your property note investments inside your Roth IRA or Roth 401k occur on a tax-deferred basis and distributions are earned tax free at the time of distribution. If you use a Roth IRA/401k, you’ll have years of tax-deferred growth on your investment – and NO TAXES at the time of distribution.

How does that stack up against the current 15{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} long term capital gains? Right… There is no comparison.

If you are already over the age of 59 1/2 and have a Roth IRA and the Roth IRA has been open more than 5 years, then you are perhaps in the sweetest spot of all, as all your gains filtered through your Self Directed Roth IRA can be distributed to you tax free without any waiting periods. This could be the ultimate leverage and a way to grow your personal wealth.

Real Estate Backed Notes could just be your “hot” ticket to financial success in “cool” times.