Performing Note Investing - Buy and Hold
A performing note is
simply a note on which the borrower is making regular payments, and
investors purchase them to achieve a stream of recurring passive income.
This is similar to purchasing a rental property but without the
headaches of property management. Many of the performing notes for sale
were created in owner financed real estate purchases, where the seller
desires to cash out rather than continuing to receive monthly payments.
These notes are generally purchased at a discount to remaining principal
balance, providing the investor with a higher effective yield than the
interest rate of the note. Double-digit yields on these investments are
quite common. Why would someone sell at a discount? The simple answer
is sometimes life circumstances dictate that money now is more important
than money over time.
