Notes in the age of Corona virus

[Lauren Feltz]

I've been researching the idea of notes recently (in particular a non-accredited fund or investing in partials) as I'd like a super passive investment option that isn't the stock market. I feel as though the notes market is in an interesting position right now financially - millions of layoffs, with potentially millions of people losing their homes. But at the same time, if the working from home trend continues, the suburban and rural housing markets may not be able to meet demand as people flee crowded cities to a more comfortable work environment. This could be a win for both the performing and non-performing sides of notes.

We just sold our primary home and downsized to the nice unit of our 4-plex, so we have the cash to invest. I'd prefer to invest with the ideology of trying to help people keep their homes. I know that's not always possible, but I'm in healthcare and an admitted helper so I'd like to keep my investing of the same mindset.

What are the thoughts from the pros? What are your projections for the near and semi-near future with investing in notes during this crazy time? Thanks so much for your thoughts!

[Chris Seveney]

@Lauren Feltz

Since they say we are in a recession but stocks are nearing all time highs and unemployment went opposite what people thought last month, I don’t think anyone knows what the heck is next.

My recommendation to anyone looking to get into any real estate business right now is due diligence on your partner is of greater importance then on an asset. Reason why is a great asset with someone inexperienced during times of turmoil can go sideways pretty quick and having someone who can steer the ship in a storm is very important.

As for partials vs a fund, partials if it’s got equity coverage is a very safe bet. A fund does spread the risk out between many assets and investors but I would tell people they would sleep better at night with a partial over a fund.