What the heck is a Real Estate “Note”?
We get this question a lot.
“Note” chatter is all we do at Note to Self and Faller Financial, but most people, even financial wizards, wonder: what the heck?
Well...today is your lucky day. Prepare to get smarter.
A "note" is essentially a loan with a piece of real estate as the collateral. Remember the first time you purchased a house? Remember the excitement? We’re gonna do THIS, and THAT, and we’re gonna create ALL kinds of memories. Ahhhhh….the days.
DIGRESSION!
If you didn’t pay cash for that home, you probably borrowed money from a bank, taking out a mortgage. And on closing day, before uncorking the bubbly, while you signed a forest of documents, you likely signed a promissory note—promising the bank you will pay back the loan amount (plus gobs of interest) over a period of time. That contractual promise, or Note, is essentially as valuable as the loan amount at the time of origination.
And that, my friends, is what a Real Estate Note is...AND what we invest in.
(Be aware: the value of a note changes over time-based on many factors.)