3 Note Investing Funds for Passive Investors
Achieving success and profits in real estate note investing often requires an abundance of time, effort, knowledge and resources. If you are investing for monthly income, but you prefer to be a little more hands-off, there are more passive ways to invest. In this article you’ll find 3 private real estate note investing funds that are more suited to the passive investor.
Why Note Investing Funds?
We all enjoy passive income, right? Maybe you want to leverage the power of compound interest to grow your wealth as quickly as possible. Or maybe you need to generate more income to live off your investments right away. Whatever you motivation, real estate note investing can be a great way to collect monthly income from real estate, without the hassle of owning rental properties.
While you can of course invest in real estate notes direct, perhaps the main reason investors choose a fund is to benefit from the experience and resources of the fund manager. I mean, why not have an experienced note investor do all of the heavy lifting – like finding good quality mortgage notes for sale – while you sit back and collect your monthly or quarterly income checks, right?
So, let’s go ahead and take a look at 3 mortgage note funds that might be better suited for passive investors.
MWM Mortgage Note Fund
The MWM Fund is my top pick of all the note funds I have reviewed recently. It is one of the most accessible mortgage note funds available today. As a Regulation A securities offering, it is available for anyone to invest in all 50 US States and Puerto Rico.
You can invest in MWM Fund with as little as $200, and being a Reg A offering, investors get access to annual and semi-annual reports and financial audits on the Securities and Exchange Commission website.
The fund management team at MWM are very experienced in the note investing space. With Founders TJ Osterman and Richard Allen having deployed over $6 million USD in non-performing mortgage notes. I’ve personally spoken with Brett Burky and Rick Allen at MWM Fund, and they seem like a great team with admirable goals.
Perhaps the coolest thing about MWM Fund is the fact that they focus on improving the position of underserved middle and low income families with access to affordable housing and financing solutions. I personally love this because it has a great fit with what we do here at Garnaco.
MWM Fund aims to pay investors an annualized yield of up to 10% from its operations turning around troubled mortgages.
Aspen Income Fund
Another option for the passive investors seeking exposure to the income and profits of mortgage note investing, is the Aspen Income Fund from Aspen Funds.
Available for accredited investors with at least $50,000 to reach the minimum investment threshold, the fund management team at Aspen focus on acquiring discounted performing mortgage notes. The fund earns income from borrower interest payments, borrower payoffs, refinances and sales of notes and real estate. In turn, investors in the fund receive a preferred monthly return.
One great benefit of the Aspen fund is liquidity. After a 1 year lock in, the fund offers best-effort liquidity. Often, investing in real estate notes successfully can take a lot of time. You might find yourself stuck with a note while you work through a loan modification with the borrower, a foreclosure process, or short sale. So this liquidity is an added bonus.
The fund target a compounded annualized return for investors of 9%. This means an investment of $100,000, could be worth $238,000 in ten years if all your monthly income from the fund is immediately reinvested.
The Aspen Fund is well-diversified. Having been running for 7 years it holds notes in 40 States, and has bought over 2,500 notes in total.
PPR Note Co
My final pick for this shortlist of note funds are the offerings from Dave Van Horn’s PPR Note Co. Dave is a regular contributor to BiggerPockets, has has literally written the book on notes investing.
PPR Note Co. started out in 2007 buying non-performing notes for it’s own account. It also brokered non performing notes – mostly 2nd position notes – to private investors. Eventually, PPR evolved and now offers to investments in its own note funds for accredited investors.
There are currently 2 note funds available through PPR; a 6% income fund and and 8% income fund. The main difference between the two seems to be the minimum investment level. The lower income fund is available to investors with just $25,000, compared to a $50,000 minimum ticket for investors in the 8% offering.
As an accredited investor offering, there is not much publicly available information on the PPR funds. But Mr Van Horn has been around for a long time, with over 30 years experience in residential and commercial real estate. So one would imagine that the PPR funds do exactly what they say on the tin!
Conclusions and Links
So, there you have it. My top 3 real estate note investing fund picks for passive investors. Remember, if you want to see new performing mortgage notes for sale every Thursday, join our Priority Investor list here. In the meantime, here are some links to other article I’ve written on Note Investing:
- Where to Buy Mortgage Notes – A Complete List of Verified Sources
- Note Investing 101 – Everything you Need to Know About Note Investing
- How to Invest in Notes – 7 Note Investing Strategies
- What is a Note and What Terms Should It Contain?
- Performing vs Non-Performing Notes – Which is the Better Investment?
- The Private Lender’s Guide to Assessing Credit Risk
- Understanding Lien Position and Priority
- How to Buy Mortgage Notes Online in 2021
- How to Assess Real Estate for note Investing and Private Lending
- Find Performing Notes for Sale in 2021
- Private Lending 101 – Everything you Need to Know About Private Money Lending
- Is Buying Mortgage Notes a Good Investment in 2021?
- Note Investing vs Rental Properties – Which is the Best Investment?
- Performing Notes – What Why and How to Buy
- Is Real Estate Note Investing Risky?
- Real Estate Notes vs REITs – Which is the Better Investment?
- The 3 Best Real Estate Investing Opportunities in 2021
- What is the Difference Between a Note and a Mortgage?
- Real Estate Notes – Everything You Need to Know
- My Top 5 Real Estate Note Investing Tools and Resources