Guest blog by Steve Landaal, VP of Portfolio Management at HIS Capital Funding
I remember as a boy, my grandmother Anna safely retired off her bank CDs. She earned a fair interest rate at that time, and she enjoyed predictable monthly payments, which paid her monthly bills.
With current CD rates, those good ole days seem to be long past.
However, if you are looking for a low risk, secured investment with predictable 
monthly payouts to earn a fair return similar to Grandma Anna, perhaps becoming a whole note passive real estate investor is your solution. Passive real estate investing presents interesting opportunities that I’ll explore in this article.
A whole note is essentially a whole mortgage.
Here is an example of a whole mortgage. A private bank specializing in real estate lends $50,000 to an experienced flipper or landlord. The lender charges a higher interest rate than a traditional bank—let’s say 10 percent for a short-term interest only loan, typically for 12 months.
This whole note can then be purchased for $50,000 by an individual or a large institutional buyer who will receive 8 percent of the 10 percent whole note.
The private bank is incentivized to sell the whole note, as they keep the 2 percent spread and their capital back to lend again on a new loan.
My Success with Passive Real Estate Investing in Whole Mortgage Notes
Several years ago, I became a whole note investor with my IRA and non-IRA funds. This type of passive real estate investing has proven itself over the years. My non-IRA transactions consistently pay out each month in predictable interest payments to my family. My IRA investments also receive consistent payments, as tax-deferred income inside the account. Whether the market is up or down, my payments come in each month, providing a secure return my wife and I can budget on.
The opportunity of passive real estate investing in whole notes allowed me to retire. I then came out of retirement and became a VP of Portfolio Management with a prominent company which aligns itself with whole note investing. In today’s technology-driven world of information, it is easy to get confused. One can easily make short-sighted investment decisions that have long-term adverse effects.
My recommendation is to keep your investment profoundly simple for you to understand and then back it up with a strong collateral position that protects your capital. When your returns are predictable and secured, you don’t need to spend your time worrying about losing hard-earned retirement money that took years to accumulate.
I can simply calculate my interest earnings on my whole notes for each month in two simple steps.
Example:
- $50,000 whole note x 8% annualized interest = $4,000 in annualized interest
- $4000 divided by 12 months equals my monthly payment of $333.33
There are Passive Real Estate Opportunities Available for Most Investors
An investor with as little as $5,000 can earn a predictable return in a fund portfolio for non-accredited and accredited investors alike.
You have the opportunity to generate substantial wealth with your self-directed IRA funds, and I trust you are well on your way. But remember, you don’t have to be a millionaire today to earn fair returns on your IRA money. It’s not necessary to have to pay high broker fees and take risky investments to achieve above average returns.
My wife and I became students of whole note investing when we started back in 2014.
Where to start? We recommend the book “The BluePrint to Secured Real Estate Lending.” If you have an interest in whole note passive real estate investing, this book will show you the good, bad and the ugly, so you can invest confidently with the proper knowledge. I am curious to hear your feedback.
You will find the process of purchasing a whole note is quite simple. The math is easy to understand, it has a strong equity position, and you can get your capital working in a reasonable time frame.
Much success to you as you as you invest with your Advanta self-directed IRA!
If I can assist you or if you have any questions don’t hesitate to reach out, I look forward to meeting you!
About the author
Steve Landaal has an extensive track record of owning, building, and selling businesses, with a strong emphasis on real estate investments. His genuine humility through each of these ventures comes from a deep-rooted belief that it has only been, and continues to be, for the glory of God.
Combining investment wisdom with trials and errors through the years, Steve has learned a great deal about key elements to building wealth and the importance of compounding interest. More importantly, he has learned about the value of others, the value of time, and the importance of investing in people.
His real estate career began in Wisconsin with the purchase of a single-income property when he was 18 years old. This grew into Landaal Investments, where he and his wife of 35 years built a portfolio of rental properties which soon expanded from residential properties into commercial. Additionally, Steve and his wife have applied the principles of business and genuine care for people, along with relentless hard work to build and sell profitable companies.
Steve is the VP of Portfolio Management at HIS Capital Funding and can be reached at 407.607.9734 or [email protected].
A word from Advanta IRA
This guest blog has been provided for informational purposes only and should not be considered as investment, tax, or legal advice. Advanta IRA does not endorse any investment opportunity mentioned in this article. We recommend you consult the appropriate professional for specific investment advice. Advanta IRA is a self-directed retirement plan administrator and as such we do not sell investments or give investing advice. However, we are happy to answer any questions you may have about how alternative assets and self-directed IRAs work. You can contact us by calling 800.524.0653 or by emailing [email protected].
