The Positive Community Impact of Note Investing for Fun and Profit
Tanya Brown is sensitive about investors wanting to get into real estate notes for the wrong reasons. Often they are “fix-and-flip” investors, coming to her for her expertise because they see real estate notes as a great way to get the properties cheap through foreclosure.
This rubs the founder of Pure Harbor Groups the wrong way. “You can’t go into note investing with the sole purpose of wanting the property back,” Brown told Michael Duncan of The Road to Financial Freedom Podcast. “You have to go in there wanting to help the people if you can.”
Brown first dabbled in real estate as a landlord, but made the rookie mistake of renting her property to her family members. Wholesaling and fix-and-flips seemed like too much work. She explored tax lien certificates before discovering note investing — the opportunity to “be the bank” in a real estate transaction instead of the buyer or the seller.
“I was like, ‘No way! Individual people can own other people’s mortgages and get the payments from ’em?’” Brown said. “I was like, ‘This doesn’t really make sense! It’s not real!’ Because it’s never been told. Nobody talks about it.”
Brown sees this as an opportunity — to relocate housing debt from the hands of an impersonal financial conglomerate to a real person in the community, who can work together with the struggling borrower to keep their house.
“The more that you have individuals in communities buying up these notes and helping people become homeowners,” she said, “it takes ownership away from the big banks and brings it locally into communities.”
At any given time, Tanya has 25-30 notes in her personal portfolio. Additionally, through Pure Harbor Groups she sources notes for other peoples’ portfolio and educates them on note investing — both how to find their own notes, and how to navigate the complex regulatory landscape that allows them to own the notes legally.
Brown is passionate about helping W2 employees place their retirement funds — self-directed IRA and solo 401(k) — into real estate notes. They’re really perfect for IRAs because they are passive investments with little risk of triggering UBIT.
Most of them are surprised to hear that this is even an option. “A lot of people don’t know about it,” Brown said.