Quick Returns are always in Notes… - Posted by Michael Morrongiello
Posted by Michael Morrongiello on May 20, 2005 at 20:55:13:
Unless you are making loans or JV-joint venturing with others on fixer / rehab properties, the Note business is generally not the place to look to for “quick returns”
Once you have accumulated some capital it can be a great place to INVEST that capital and get it working for you long term.
While its certainly possible to make 15%,18%, 20% + on your money. Think about this; once that capital is returned to you, it often will sit idle earning far less in the way of returns. If you earn 15% but it only over a 6 month time frame, you are now faced with having to reinvest those funds again.
LONGER TERM can often be better- That is why investing in a discounted Note that might safely produce lets say a lower 12% YTM - yield to maturity but where the funds are earning that type of return over a longer period of time and where there is always that possibility that the Note will pay off early thereby POPPING your yield significantly. Longer term discount paper deals can relieve you of constantly trying to find places to park excess cash. Just a thought…