Learning note investing by investing in notes

[Lucas Allmon]

Afternoon all,

I listened to the Bigger Pockets Podcast with @Bob Malecki last week, and it's like a bunch of connections that have been waiting to be made, finally went off in my brain. 

I have been looking to get into more active investing of passive income assets for a while (My general BP Introduction is here).

In the past 4-5 days I've read

• @Dave Van Horn 's Intro Ebook
• Paper Profits
• Note Investing Made Easier
• Performance Anxiety

And I'm not sure I've ever read material that made so much sense, but the missing pieces now, are the moving parts, the doing.

So my question would be, what is the next actionable step I need to take, to start learning by doing?

Taking in what I do know in my limited knowledge, one route might be to buy a performing junior lien off of FCI Exchange in order to actually get some paper in my possession. 

That way I can see how to service a loan, and what a collateral file looks like, with less risk, before more analyzing non-performing notes, or networking for more note opportunities.

All advice is greatly appreciated and will be taken.

[Don Konipol]

@Lucas Allmon, I would advise that you should determine first how active or passive you want to be, and have time to be, with your investments.

Much of investing in real estate and real estate assets can now be done from anywhere you have a high speed internet connection.  this has been a massive change in the last 10 years.

Also, consider whether you seek a CAREER in real estate investments, or just a profitable sideline with your career in another field.

Passive vs active investing is not an absolute....it more of a spectrum with available opportunities all along the spectrum; some more toward the passive side, some more active.

So, taking note investing, the most passive way to invest is to invest in a private note fund, or REIT. The major decisions in this are whether and when to invest, and whether or when to sell. time spent monitoring is minimal.

Net on the passive line but somewhat more active is to invest in a loan syndication.  Here, you will make a decision on investing in an individual note.  With enough capital you can own pieces of 5, 10, or more high interest notes.

Moving toward the middle of the spectrum we have purchasing individual performing notes from brokers. A further step toward active would be finding these notes or loan opportunities yourself and eliminating the middle man.

Much more toward an active investing activity would be investing in individual non performing notes; then you will be engaged in and hiring people to "work" the note; either make it a reperforming note, modify the note, foreclose and sell, or foreclose and rehab the property ending up with either a sale or rental.

Finally, on the most active front, there is establishing, or buying into, a note syndicating business, allowing other more passive investors to participate, and being compensated on a fee basis.