We talked quite a bit last week about the secret world of mortgage notes as an alternative investment class for financial freedom.
The power of mortgage note investing can be unlocked if we commit to building a portfolio of mortgages – just like an institutional investor would. This is how we can craft true financial freedom.
When we left off last week, we profiled a mortgage note listing that will generate $605 a month in extra income for whoever invests in it.
Starting there, let’s assume that we commit to buying a new mortgage note each year with similar characteristics to build out a portfolio. Obviously the numbers will be a little different for each note, but let’s assume that we can get another $605 in monthly cash flow for each note that we acquire. We’ll call this our financial freedom plan.
Here are the numbers if we simply add one mortgage to our portfolio each year:
Again, the numbers won’t be quite this clean in practice. But investing in a new mortgage note like the one we profiled each year can create thousands of dollars in extra monthly income for us in just a few years’ time.
And this projection may be overly conservative… because it assumes that we aren’t reinvesting our profits. So what if we took this extra income and committed to adding a second note to our portfolio each year?
Let’s say that the second note is a smaller mortgage with a monthly payment of $350 a year. Here’s how those numbers work out:
In this scenario, you would be able to create over $5,000 in extra monthly income in just six years. That’s money that flows right into your bank account each month. This is how we can work up to financial freedom.
Of course, there’s nothing that says you have to build up a portfolio gradually like this. Once you’ve learned the process, you can go as fast or as slow as you like.
And here’s the best part – this monthly income comes to us without us ever having to sell anything. That means we don’t have to worry about capital gains taxes.
Instead, we can use some creative strategies to minimize the taxes on our passive income and potentially even offset other sources of income. That will be the subject of tomorrow’s entry…
-Joe Withrow
P.S. Don’t forget about our strategy session this week on the secret of mortgage notes. We’ll get started at 7:30 pm Eastern on Wednesday, October 8th.
I anticipate the session running for 45 minutes to an hour. Then we’ll open it up to Q&A… and we can discuss anything and everything that folks want.
My goal is for everyone to leave the session with a firm grasp on how they can start building streams of extra income by investing in mortgage notes.
If you’re interested, you can register for the session at: https://phoenicianleague.com/session