Turn-key notes could be a valuable addition to your investment portfolio.

It’s hard to dispute this quote from Robert Kiyosaki: “To
obtain financial freedom, one must be either a business owner, an investor or
both, generating passive income, particularly on a monthly basis.”

Passive monthly income investments are available in the real
estate market today in the form of “turn-key notes.”

Record inventory levels of performing notes (PN) were
created in the years following the crash. Some were created as a result of a
loan workout, while others were created to sell newly renovated property. Much
of that inventory has now been seasoned for six years or more. In addition,
property values have increased nationwide, making these notes an outstanding
value.

The beauty of these notes is that with a minimal amount of
effort, investors can run their initial due diligence in about the same time it
takes to analyze a stock. If it passes the initial due diligence phase,
investors can lock up the deal and finalize it after a secondary level of due
diligence such as appraisal, external property inspection or title report
before financing or closing the deal.

If you close a deal this month, you get paid next month and
every month thereafter for as many payments that you purchased. The payments
are collected, sometimes auto debited, by servicing companies that then forward
the payment to you—passive, secured and high yielding.

What to Look For
Without a doubt, the best turn-key notes technique is to buy short term,
two- to five-year, partials on PLs. Your yield will typically be between 7%
and11%, and your investment will be backed by a property worth two to three
times what you have in it. In addition, the loan will already be third-party
serviced, and you will be buying from a note seller who has a vested interest
in getting the income stream back at some point in the future.

The graphic at the top of the page illustrates this investment.

Just over two years ago, a real estate investor purchased a
property. After renovating it, she decided to sell it with seller financing.
She had a mortgage residential mortgage loan originator (RMLO) facilitate a
seller-financed note by qualifying the potential buyers and handling the
paperwork. The borrowers have been making payments for two years. The payment
includes principal, interest, taxes and insurance. The payments are collected,
escrowed and accounted for by ABC servicing company. [In another scenario, she
could have just purchased the note directly from a note investment company.]

This investor decides that she needs to raise some capital
for another investment. Instead of borrowing money, she decides to sell a part
of her note. Here is what you found on just the surface level due diligence:

• The note has two years of seasoning.
• According to the payment history, the payments
  are auto debited on the first of the month.
• Property taxes are current.
• According to Realtor.com and other free sources,
  the property value appears to be around $130,000.
• The loan was written for 360 months, and the
  payments are $880 per month.
• You can purchase the next 60 payments for the
  seller price of $42,400.

Sizing It Up
Even though sellers will provide more information than this, if this is all
you know, does it seem to make sense of the surface?

Well, six months of seasoning is considered OK and this has
two years of verifiable payments, so we are good there. The house is worth
about $130,000 and was renovated just over two years ago. We will have only
$42,400 in the deal, so we are good there. If we invested $42,400 and received
$880 per month for 60 months back, we would be making 9% yield per year, so we
are good there.

You could invest using cash on hand or your IRA or other tax
preferred retirement accounts. You could partner with another investor.

These income streams can be:

• Done from any place with an internet connection.
• Analyzed in 20 minutes (including document
  verification).
• Utilize third-party verification.

You don’t need to travel or canvas neighborhoods, and the
payments are automatically deposited every month while you sleep. This is a
secured passive monthly income that, as Robert Kiyosaki pointed out, enables
financial freedom