Make Money on Money You Already Have
I just get to make money by having money and that’s the benefit of notes. You get to be the bank and you get to make money for just having money. It’s one of the most exciting investments I do because it’s so passive.
Lending, in general, you are giving of money or a property to another person with the expectation that it will be reimbursed.
What and How I Do Notes
[02:39] if I have money sitting there, I’ll find somebody who needs it. I work with a specific rehabber and I’ve worked with them for a while now where I’ve found that they can get a house, buy it, rehab it and sell it within about three months.
[03:36] We’re going to say three months and for easy numbers, I’m going to say I lend it out at 12% interest. So that’s 1% per month and doing so I’m able to turn my money faster and I’m able to get a return instead of it sitting there and not making anything. But I do so by securing it with real estate. So just like you were to go to the bank, go get a mortgage for a house, and then the bank owns the house and you’re paying the bank cause you’re going to pay off this mortgage and interest. So it’s very similar to that concept, except I’m lending to a rehabber who’s going to fix a house in a community that it needs to be fixed, it’ll look amazing and it’ll add value to the community. These rehabbers doing the job by fixing the house are going to get paid from it and my money fits his model.
[04:05] So I’m lending the money out and I’m not managing it. So I’m not saying, well, you can only spend it on this. I’m lending it with secured security of the house. So a lot of the notes I do are a house in the area I live in is about $150,000. My secured money is about $30,000. So if they were to not pay me, I’m just telling you this is what the bank would do if they were to not paying me, I can foreclose on the house, the $150,000 house because my $30,000 note was secured by that house. So it puts me in a great position where if something were to go bad, I’m going to be covered.
[13:13] I get to act as the bank and I get to use my money to make somebody else’s dream come true. But I also get paid a very fair amount for it. So using that money that you have and using the skills and all the knowledge you have, you’re able to grow this account by just having money in it and that’s the benefits of saving.