Posted by Steve-At;l on May 11, 2000 at 18:33:08:
Investing in notes and mortgages is a good use for cash. Yields can be 15%++ and its all secured by real estate. Buying discounted notes can make yields go much higher.
Before I invest in a note or mortgage, I need to feel comfortable about the collateral and be able to say “That’s a property I would like to own”.
There are other investments with a low risk/high yield, but notes secured by real estate are a good choice.
Regarding using your cash to lend to yourself, you need to ask yourself, “Can I invest that cash elsewhere for a higher return than I am paying myself?” If you lend it to yourself at 15% interest(like hard money), you can easily beat that yield by buying discount notes instead.
Of course, some could argue that the profit from the deal should be used to calculate the yield, but I think that taints the comparison of whether its best to borrow hard money for deals or use your own cash.
I would be interested in other’s thoughts.