Note investing vs. buy and hold rental income

[Account Closed]

Buy and hold multifamily residential property vs. note investing vs. REITs, Pro vs. Con?

One podcast I heared Joshua Dorkin mention he was interested in shifting from buy and hold multifamily residential, to note investing. The podcast on notes got me thinking about yields and risk. I may be comparing apples to oranges to bannas as note investing has a commercial property aspect that multi family residential does not. There's also tax benefits to actually owning property, whereas notes or REITs would be considered a capital gain investment?

[Bill B.]

Hi,

There is one issue that I rarely see addressed in the discussions of buy and hold vs notes.  Assuming that you (as the landlord/owner) maintain the asset, your cash flow never stops.  In very SHARP contrast, notes "end".   (mature/pay off/ however you want to term the event)

This can be managed, but the point must be addressed.  To address this quite simply, an investor can roll a portion of note payments received into new/more notes.  

In contrast, if you buy and hold, and have X number of doors all paid off, with reserves in place, and great PM, the checks never stop.......ever......    Obviously, this is a gross over simplification, but the point stands.  Buy and Hold "never ends".  Notes "end".

This is only important, I guess, if an investor desires to build "legacy wealth" for their family.  But I thought I'd just make sure that the required "replenishment" of notes is built into everyone's plans.

I hope this helps.