Why I Moved from Investing in Apartments to Investing in Notes

In the last year, opportunities to buy apartments at a reasonable cap rate pretty much disappeared from my Colorado Springs market. This was mostly due to all the cash coming from Denver brought down by investors who had been priced out of the Denver market.

In the fall of 2014 I bid on a 30-unit over-55 property. It needed new windows but was otherwise clean and full. My bid was rejected and it sat for a couple months. Late in the year it went under contract, but fell back out in March. My broker called to tell me it was back in play and to ready a proof of funds letter. He said only one other investor had been told about it. When I called in the next day, it was already under contract for more than the asking price, all cash. And in February, a 60-unit apartment in my buying area was bought by an out-ot-state investor for all cash. Tough to compete with that!

I had already been training in notes for several months, and this apartment sale was the final tipping point for me. I decided to go full time into buying, selling and creating notes.

One of the big problems with this field is that hardly anyone, even long-time real estate investors, has any idea what notes are, much less how to leverage them into a great investment. There is fantastic training available from note pros who have been operating under the radar for decades, but it's my job to in turn educate my investors so they feel comfortable in the note space.

To that end I have created a new company and new website dedicated to telling the note story to investors looking for a strong return backed by cash-flowing real estate. I am now working with a few of these to help them build a portfolio of notes to diversify their investments. I'm putting many of them into performing notes, ones that have a strong and ongoing record of on-time mortgage payments. I also create joint venture partnerships with investors who have a higher risk tolerance and buy non-performing notes with them.