If you’re thinking about buying notes, you probably arrived on this article because you are doing your due diligence and you want to know what are the risks of note buying in Phoenix to help you determine whether or not to invest in them.
That’s a smart decision to perform due diligence before doing ANY investing, so we’ll answer your question, “What are the risks of note buying in Phoenix?” here. Notes May Be Non-Performing… But Is That Such A Bad Thing?Notes are like mortgages. When you buy cash flowing notes, you’re buying the possibility that the homeowner will continue to pay their “mortgage” payments. While many do (these are called “performing notes”), not all notes are performing. Some start out as performing notes and then become non-performing – that is, the homeowner chooses to no longer pay. The good news is: there are a few ways you can deal with this risk!
Other Risks May Include An Out-Of-State Owner, Non-Predictable Notes, Etc.Notes that are local might be easier to deal with than those that are out-of-state. However, this varies. If you’re just starting out then make sure you buy notes that are only in Arizona, or even just in Phoenix (if available). Or, you might find that the note’s cash flow is just not very predictable. Technically the note is non-performing sometimes and performing at other times. You may simply need to work with the homeowner to help them find a payment method that works for them. SummaryAs with all investments, the risks tend to align with rewards: the riskier an investment is, the greater the reward. So it’s important that you find the balance between the amount of risk you’re willing to take on versus the amount of reward you want to have. Avoiding risk completely will mean zero return… so you may need to take on some risk to get a return on your investment. Fortunately, with note investing, you can manage your risks and still enjoy a good reward. No matter what level of risk you’re comfortable with, there’s probably a note for you! At Lands For You, we are note sellers and we would be happy to work with you to show you what notes we have available and help you start investing in notes. Just pick up the phone and call our team at 602-806-7899 or click here now and fill out the form, and we’ll share our list of available notes with you.
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February 2021
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