If you’re thinking about buying notes, you probably arrived at this article because you are doing your due diligence and you want to know what are the risks of note buying in Omaha and Council Bluffs 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 Omaha and Council Bluffs?” 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 that there are a few ways you can deal with this risk!
- First, you can work with the owner to get them to pay.
- Or, you can sell the non-performing note to another professional home buyer in Omaha and Council Bluffs who might be better at dealing with the situation (so at least you get some of your money out of the situation).
And better yet if it turns out that you’re really good at making non-performing notes into performing notes then you’ll actually have another way of making money you can become the direct cash home buyer in Omaha and Council Bluffs who buys non-performing notes at a discount and turns them into performing (cash flowing!) notes again.
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 Omaha and Council Bluffs, or even just in Omaha and Council Bluffs (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.
Summary
As 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 Harter Investments, we buy houses in Omaha and Council Bluffs 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 call a professional direct cash home buyer in Council Bluffs and Omaha Harter Investments at 402-939-6556 or send us a message today or visit us at www.harterinvestments.com!
