The Beginner’s Guide to Investing in Promissory Notes: Key Questions and Due Diligence
As the Director of Funding at Secured Investment Corp, I’m often asked how to get started with investing in promissory notes. With so much information available on the topic, it can be overwhelming for beginners to know where to begin or what questions to ask. Let me share my expert insights on key questions to ask yourself and due diligence to perform before investing in promissory notes.
Key Questions to Ask Yourself
Before diving into the world of promissory notes, it’s important to ask yourself some key questions to guide your investment strategy. These include:
- Am I looking for cash flow or a long-term investment strategy?
- Should I invest in performing or discounted, underperforming notes?
- Is the market or geographical area important to me?
- What is my target rate of return?
Due Diligence on Promissory Notes
Once you’ve answered the key questions, it’s time to perform your due diligence on a specific promissory note. This includes reviewing the underwriting package and closing documents to ensure you have a clear understanding of what you’re buying. Other due diligence items to consider include:
- Reviewing the borrower’s payment history and credit score
- Evaluating the property’s market value and condition
- Assessing the lien’s position and potential risks
Start Your Journey into Promissory Notes
Investing in promissory notes can be a great way to generate passive income, but it’s important to do your research and understand the risks involved. If you’re ready to start your journey into promissory notes, contact Secured Investment Corp for more information and guidance. Our team of professionals can help you navigate the complex world of promissory notes and create a successful investment strategy.
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Director of Funding
Heather is a tenured employee that has worked in the Private Money Industry for over 15 years. Heather has been directly involved in the sale of over 100 million dollars in Trust Deed Mortgages and raised over 30 million in Secured Investment Corps High Yield Equity Funds. She has had experience in assisting underwriting, managing the Cogo and Servicing team in addition to Investor Relations.
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