USA, 30th July: In a recent press release, Mike told us the fundamentals of real estate notes investing. For example, what are the factors to understand before investing in notes?

He identified the top 5 points, and these are:
● Borrower
● Real estate itself (after all these are real estate notes)
● Terms in the note
● Down payment
● Consistency
The first one to check and consider is the borrower himself. This means an investor must check his credit score, income statement, balance sheet, and other verified detail.

With more info at hand, an investor can take an appropriate decision. Otherwise, it can costly and time-consuming for anyone.

If the credit score is dangerously low, the note's price will be lowered. A credit score of 700 indicates creditworthiness, and less risk. A decent debt-to-income ratio is the best thing for an investor to look for.

The preferable limit is less than 36 percent. On the other hand, a low housing expense-to-income ratio must be less than 28 percent.

The second thing to consider is real estate. How risky is the management of the property? How costly will be the rehabilitation? These are the things to consider while investing in real estate notes.

The best shot is family-owned houses, as they tend to be less risky. The second on the list is commercial buildings, and even efficient note investors stay away from industrial areas.

For vacant lands, investors may have to worry about different processes like zoning. You can contact hedge funds to get notes for these properties, as you will get mostly reperforming notes from there.

The third point is how invested the borrower is in the property. If the stake is larger the notes will be performing. After learning the credit score, one can determine the down payment ratio.

The note terms are obviously worth studying. One needs to know what has been written on these papers. Lastly, an investor must focus on consistency and check if all the requisites must be to the point.

Investment is a crucial thing, and it requires a lot of footwork. If the investment area is real estate, then one must be extra careful.

Why? Because it's always a good idea to do so. Mike agrees that real estate note investing is a proper choice if the right steps are taken. In that case, an investor can earn millions and billions from the investment.