Yesterday, I had the pleasure of meeting with a new investor to explore whether private mortgage investing would be a good fit for them. As we discussed different investment options, they casually mentioned being approached by an acquaintance to invest in promissory notes with a so-called real estate guru.
I wish I had a video of my reaction! My eyes probably bugged out of my head, and if I had been sipping coffee, I’m sure it would have gone flying. Instead, I immediately blurted out my opinion on promissory notes—but we’ll get to that in a moment.
The Importance of a Face-to-Face Meeting
This investor had been referred to me by their real estate lawyer. While we had already spoken on the phone, nothing beats a face-to-face conversation when it comes to building trust.
Trust, in my opinion, relies on both intellect and intuition. It’s a lot like dating—you can learn more about someone in the first five minutes of an in-person conversation than you would in weeks of texting or phone calls.
Bringing on a new investor is always a two-way interview. The investor needs to understand what they’re investing in and have the chance to ask all their questions. Meanwhile, I need to assess whether private mortgages are a suitable fit for their portfolio and, equally important, whether we’d work well together. Private mortgage investing is hands-on, and it’s crucial that everyone is aligned before taking the plunge.
A Seasoned Investor Exploring New Options
My potential investor was an experienced professional, previously holding a C-suite role in a U.S. based company. They had long hoped for a financial package that would allow them to take a step back from corporate life—and that day had finally come. With a solid nest egg saved up, they were looking for investment opportunities that could generate passive income while they decided on their next chapter. Too young to retire, but in no rush to rejoin the corporate grind.
We also discussed their real estate experience. They had successfully flipped homes, strategically taking advantage of rising property values over the last decade. They had also moved principal residences multiple times for financial gain. Notably, they had never been landlords—avoiding tenant headaches was a conscious choice.
The Red Flag of Promissory Notes
Now, back to promissory notes. If anyone ever suggests investing in one, there’s only one response: RUN AWAY! Block their number, delete their emails, and sprint in the opposite direction!
As another mortgage broker once put it, a promissory note is like a “pinky swear to pay you back.” Just don’t do it!
Still not convinced? Google the following names: Jim Pellerin, Claire Drage, Greg Martel. Add “promissory notes” to your search, and you’ll have plenty of cautionary tales for bedtime reading.
The only time a promissory note makes sense is if you’re giving a friend or family member a “loan” with no expectation of ever seeing that money again. Otherwise, steer clear.
A Happy Ending
In the end, I found this investor to be a great candidate for private mortgage investing, and I’m glad we had the chance to meet before they made the mistake of putting money into promissory notes. By making informed choices, they can now pursue safer, smarter investments with confidence.
Reach out to Andy if you would like to discuss investing in private mortgages.
Call or text Andy at: 289-400-3420 or email him at: <http://www.privatedaddy.com/?q=T1dwQW15emJCFhpdYmBLBDhjG2V7Y0hDVA-3D-3D_19>.