Real Estate Notes: Differing Investment Approaches

Over the past decade, fluctuations in the real estate market have driven many real estate investors to move to investing in notes. Real estate notes offer many benefits to those looking to reap the rewards of real estate investment while minimizing risk. The real estate investment and note sales attorneys at Rosenberg Martin Greenberg are intimately familiar with the construction of note deals and serve clients looking to protect themselves and their assets throughout these types of arrangements.

Investing in real estate v. notes

One need not look too far to spot differences between real estate investments and investments in notes. Most significantly, the nature of the relationship between the business owner and the property is different – a real estate investor often owns the property while the notes investor merely has a potential interest in it – but that interest can become an ownership in the event of a default.

This difference can be an advantage or disadvantage depending on the situation. Ownership allows control but also increased responsibility. Investments in notes are also more complex because multiple investors can own notes secured by the same property, making research and strategy crucial.

Considerations in notes investments

Note purchases present variables in timing, priority, execution, and exit strategy. Whether purchasing or selling notes, there are steps that an investor can take to improve the rate of success. Transactions involving notes should ideally involve:

  • Due diligence – It is important to have a clear understanding of the collateral, the borrower, the underlying loan documents, and the other interests in the property that is collateral for the note.
  • Consideration of whether to invest in first or later notes, or performing or non-performing notes – Each scenario requires a different approach in structuring the deal and protecting investor interests in case of a default.
  • Assistance with documents preparation – Poor document preparation can jeopardize the interest in the property and the ability to enforce rights in the event of a default.
  • Perfecting agreements – Ensuring all agreements are fully executed is necessary for the parties to bring about the intended transaction and make sure it is fully and legally enforceable.
  • Ensuring compliance – Regulatory compliance is complex and a trained eye is needed to spot all of the potential pitfalls before a problem arises.

Note sales counsel in Maryland

The attorneys of Rosenberg Martin Greenberg are dedicated to counseling and representing investors and entrepreneurs who buy real estate and notes.  In addition, we counsel banks and other financial institutions selling such assets.   We make it our business to know your business, staying on top of changes in the law and compliance developments.

Whether it means buying or selling notes, individually or in groups or pools, in an initial transaction or a later sale or purchase, RMG attorneys provide a complete range of services. We understand the attention that should be paid to collateral, documentation, and each intricacy of a large-scale note transaction.

Let us put our expertise to work for you, and help your business ventures flourish. RMG real estate finance attorneys are based in Maryland and also serve clients throughout Delaware and the Greater DC area. Call Rosenberg, Martin Greenberg today to speak with an attorney.