Active Vs Passive Note Investing
Many investors who want to get involved in private note investments have a hard time finding the right education and more importantly the right approach to Private Mortgage (also called Deed of Trust) investments. The difference in the type of investing boils down to the state and how the loan is secured or collateralized against the property, as well the type of foreclosure process. This process will determine the type of security instrument (mortgage or deed of trust) used in that state. These are all educational studies for another day. Today we are going to be analyzing the two ways that investors can invest in notes, Actively or Passively. As the name indicates the Active investor/ lender role is one that involves much more education, time commitment, knowledge and experience to be successful, the other, a Passive investor/ lender simply means you find the professionals doing those active roles, and make them part of your team. Above is the video describing these two roles, and hopefully a way that you can determine which role you would like to participate in. Below are some highlights of the video if watching a video is not your cup of tea. At the very bottom is a form to request access to the Active vs Passive Diagram mentioned in the video.
Active Private Lending
Active Lenders go by many different names, some call themselves Brokers, others call themselves Hard Money lenders, and some even call them selves Private Lenders. At the end of the day they are running a business and whether they have the capital through internal means or them source the capital from other sources, it is a full time job, a career.
Active Lending Responsibilities
Being an Active Lender carry’s many responsibilities a few which are listed here. Active lenders can stay small and do a few deals a year, make a decent living and not have to build a full time business. However if they want to grow they have to put systems and processes in place to make sure they can scale and grow accordingly.
Passive Private Lending
Being a Passive Lender tends to be called simply a passive investor. They utilize all the professionals the Active Lender has put together and leverage the Active Investors network. Normally a passive investors workload is minimal, if even at all. For those seeking monthly income without the headaches of running a business or dealing with tenants, this is the purest form there is.
Passive Lending Responsibilities
As you can see the “responsibilities” of the passive investor tend to be guidelines and best practices rather than actual tasks. Their main focus is to have a network of active lenders to pick the deals they want to fund, sit back and collect mailbox money.
Comparison Considerations
Not everyone fits into the Active Lender role and not everyone fits into the Passive Lender/ Investor role. To find out how you may best fit within either of these roles as you invest in Notes otherwise called Loans, this section covers that and the primary metrics you will need to consider to decide if which type of lender you will be.
If you watched the video you know that there was an “Active vs Passive” diagram. You can get direct access to the comparison diagram by filling in the information to the right, and following instructions. This diagram will help you determine which type of investor/ lender you actually wish to be a part of. At Blue Bay Capital I am committed to helping Note investors determine if they prefer to be an Active Investor/ Lender or a Passive Investor/ Lender. We offer incredible opportunities for Passive Investors through our Turn-Key Private Lending solution. We also offer co-sponsored lending services with qualified partner lenders. Ask us how to become a Blue Bay Capital certified partner lender if you are wanting to become an Active Investor/ Lender.
Are you disappointed with the performance of the markets? Are you watching your retirement accounts constantly decrease in value or not even keep up with inflation? Have you ever considered investing like the banks do, and lend your money? Consider partnering with Blue Bay Capital in our Turn-Key Private Lending solution.
Do you have questions? Send me a quick email below with your questions concerning this presentation and I’ll be happy to answer them, completely and thoroughly.
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