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November 12, 2016

High Yield Safe Investments Secured by Real Estate

Safe Investments for Accredited Investors

If there were a way for you to earn double-digit profits from high yield, safe investments that were secured by real estate for the preservation of your capital – would you want to know about it? And what if you learned that these investments were only available to “accredited investors”? Would you qualify?

For the record: there is no such thing as perfectly safe investments. However, there are a number of legitimate, low risk investments that the investment community loosely refers to as “safe” investments — so we will follow suit in this article. But, be clear that there is no such thing as an investment without some element of risk.

There are means to reduce an investment’s risk while also providing extraordinary income and profits. And in this author’s opinion, the most effective means of risk reduction is to back the investment with hard assets such as real estate.

Now, let’s determine how to qualify as “accredited investors”:

In the United States, according to the Federal Securities Act of 1933 (still in effect today): “For an individual to be considered an accredited investor, they must have a net worth of at least one million US dollars or have made at least $200,000 each year for the last two years ($300,000 with his or her spouse if married) and have the expectation to make the same amount this year.” (Source: VentureChoice.com)

High yield safe investments for accredited investors:

There are a number of companies that deal exclusively with high yield, safe investments that are secured by hard assets such as real estate (which is why they are termed “safe”). And, their investment offerings are categorized as “Regulation D Securities”. These investments can only be offered to accredited investors according to the Securities Act of 1933.

The accredited investors who invest in these companies’ Regulation D securities are typically placed in first or primary lien position for the investment and the assets that are being used as its security. In laymen’s terms, this means that in the event of a major problem with the investment, these assets (real estate, for example) can be sold and the investors would be the first in line to get paid from the proceeds of that sale. This is not unlike the scenario where a bank holds the first trust deed on a home that goes into foreclosure and the bank then is first in line to be paid or take ownership of the home.

For the purposes of this article, we will focus on the following very timely high yield, safe investments:

REO property investment (bank owned foreclosure real estate):

REO is an acronym for “Real Estate Owned”. This refers to real estate (usually homes) that has been repossessed through the foreclosure process and become the property of the bank or lender.

There are a number of companies and individuals who are currently investing in the “flourishing” REO property investment market. However, the fact is that very few of them are making any real money at it. And this is because it is not a business for novices.

The select companies that are making real money in the REO property investment market are specialized businesses that we call “REO Companies”. These are organizations that have developed high level relationships with banks and other lenders and have gained access to their lists of REO properties (usually before they are released to the general public). The premier REO companies also have networks of appraisers, building contractors and real estate agents “on the ground” in each market who help identify, acquire, repair and resell the REO properties systematically.

The key to making money in an REO property investment is to invest with one of the premier REO companies versus trying to do it yourself. The challenge is finding the right REO company to invest with. What you should look for is an organization that has an experienced management team, bank and lender relationships, a network of people “on the ground” (as noted above) and a proven track record of success in the foreclosure business.

Want to earn extraordinary profits in today’s economy? These high yield, safe investments are very real and they are out there to be made right now. This is one of the few investment alternatives today that is thriving because of the recession. And REO companies are always looking for accredited investors because of the tight credit markets today.

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