Why Short Notes Are the Smart Choice for Real Estate Investment Newcomers

Navigating real estate investing as a beginner can be a thrilling yet daunting endeavor. In a digital age overflowing with information, determining the best investment opportunities can feel like finding a needle in a haystack, especially for those who have only recently begun embarking on their passive income journey.

We’ll delve into the common hurdles that beginner investors run into, and explore how Connect Invest’s Short Notes offer a solution to these challenges, providing a streamlined avenue to generate passive income through real estate investing.

Barriers to Entry in Real Estate Investing

In a recent survey conducted by Lending Tree, participants were asked to identify the most effective wealth-building strategies. 45% of respondents ranked real estate as their top choice - but surprisingly, only 14% reported investing in real estate aside from their primary residence. Why is such a small portion of respondents interested in investing in real estate aside from investing into their personal home? What are the barriers preventing individuals from investing in new construction, or seeking out real estate investment platforms to assist them?

To shed light on this issue, let’s explore some of the most prevalent barriers to real estate investing commonly encountered by beginners.

• Insufficient capital to cover expenses such as down payments, closing costs, legal fees, and maintenance remains the most significant barrier for those seeking to purchase properties to rent out.

• Limited knowledge and experience not only hinder investors from identifying optimal real estate opportunities but also increase the risk of making unwise decisions while navigating the complexities of the real estate market.

• The considerable time commitment required to learn about the real estate industry, analyze and forecast market trends, and evaluate properties is extremely demanding. The complexities of the industry make it difficult for investors to allocate time for research, property visits, financial management, and negotiation.

• Real estate investment entails inherent risks, including market fluctuations, legal complexities, tenant issues, and property damage, which may discourage investors.

• Identifying the best real estate investments demands experience, a resource that new investors lack.

• Veteran investors rely on well-defined strategies and plans of actions that guide their decision-making. Beginner investors usually do not have the essential experience, or the advisors, to formulate such plans.

• Wealth accumulation is a long-term endeavor, yet some investors struggle with impatience and adversity when encountering obstacles along the way. 

• Currently, high interest rates are diminishing the appeal of property ownership, acting as a deterrent to potential investors.

• Direct property ownership necessitates time and expertise to manage daily operations, rent collection, repairs, vacancy filling, and financial management.

• The broadness of the real estate market is overwhelming to say the very least - it’s a challenge narrowing down options to identify suitable investment properties.

• Many real estate investment opportunities are restricted only to accredited investors, shutting out unaccredited investors completely.

• Opportunities to invest in real estate besides property ownership, such as real estate debt investing, are not well known.

Breaking Down the Barriers to Real Estate Investing

It’s safe to say that the most common type of real estate investing, property ownership, is not the most accessible option for most beginner investors. That’s where Connect Invest and our Short Notes model comes in.

Connect Invest is founded on the principle of accessibility, with the goal of democratizing real estate debt investing. Our mission is to make wealth accumulation and passive income through real estate attainable for everyone. Connect Invest founder and CEO, Todd Parriott, leverages his 30-year background in real estate and financial services to drive this mission forward. Capitalizing on the rise of fintech and alternative investment platforms, Todd transformed the vision of accessibility in the real estate investment space into a reality.

At Connect Invest, we endeavor to make the benefits of real estate investing accessible to both novice and seasoned investors, surpassing traditional methods such as property ownership, house hacking, flipping, or funding individual trust deed investments without clear, defined exit dates. 

Since Connect Invest’s inception in 2020, we have offered borrower-payment dependent notes, and in 2021, we introduced our innovative Short Note model. Our investor funded Short Notes contribute to a broad range of private commercial and residential projects throughout the US, encompassing various stages, from acquisition, construction, and development. Short Notes broadened our investor base and introduced additional benefits for investors, such as defined exit dates, extra diversification, and monthly interest payments, aligning with Connect Invest’s commitment to accessibility.

Addressing common investor grievances, including lack of defined exit dates, limited access to investment information, and absence of fixed rates, Todd spearheaded the development of a streamlined platform. Through the Connect Invest platform, investors can diversify their personal portfolios with active real estate projects seamlessly.

Introducing Short Notes

Short Note offerings are a debt note issued by Connect Invest used to fund borrowers seeking capital for operational needs or to bridge cash flow gaps. Investors purchase the Short Notes and indirectly fund various projects, earning passive income through the monthly interest paid by the borrower on the loan.

Connect Invest’s diversified Short Note Portfolio contains first-position, collateral-backed real estate projects funded by investors through three separate Short Note offerings. Exclusively investing into first-position, collateral-backed loans protects investor funds and ensures Connect Invest as first priority when the loan is paid back or in the rare event a borrower defaults. Our Short Note offerings ensure investors receive defined exit dates, fixed rates, easy accessibility, and monthly interest payments disbursed to digital wallets.

While Connect Invest is not a direct real estate fund, our investor funds support real estate debt through trust deed investments with our loan originator servicer. Our Short Note offerings enable us to fund a diverse range of real estate projects on behalf of investors.

Investors start earning monthly income payments the month following the activation of their Short Note. These payments, derived from the borrower-paid interest, are fixed-rate and consistent throughout the investment term. At the end of an investors Short Note term, your principal will also be paid back.

With significant success in the real estate alternative investment sector, Connect Invest’s Short Note Portfolio spans over 100+ active and paid off projects located across 14 states and 36 cities. As of March 31, 2024, Connect Invest has funded over $13.05m through Short Notes, and has paid out over $588k in interest payments to investors.

Connect Invest is pleased to provide three different Short Note offerings:

• 6 month investment term, 7.5% APY
• 12 month investment term, 8% APY
• 24 month investment term, 9% APY

Explaining the Protection Behind Short Notes

Connect Invest adheres to a range of protective measures, providing multiple layers of security for investors. These protections include:

• Primary Creditor Status: Specializing in first-position real estate loans, Connect Invest holds the primary creditor status, granting us exclusive legal rights in the event of a default. This ensures our prioritized access to recover loan amounts before any other creditors, bolstering investor confidence.

• Collateralized Assets: Our loans are backed by tangible real estate assets such as buildings and land, serving as robust collateral. In the event of a default, we retain the option to repossess or take ownership of these assets, further safeguarding our investments.

• Expert Collaboration: Connect Invest works closely with Ignite Funding, a leading real estate hard money lender based in Las Vegas. With over two decades of robust experience, constant rigorous due diligence, and a track record of over $1.7b in investor funded loans, Ignite Funding brings invaluable expertise to our endeavor, ensuring only the most reliable projects receive funding.

Parting Thoughts

Connect Invest strives to democratize real estate investing, ensuring accessibility, fixed rates, zero account fees, and defined exit dates for both beginner and veteran investors. Our Short Notes cater to the everyday investor, with no accreditation requirements to invest.

Getting started is extremely simple, and requires a minimum investment of $500. Investors start earning monthly passive income just one month after activating a Short Note. With Short Note terms ranging from 6 to 24 months, and their interest yields ranging from 7.5% - 9% APY, Short Notes provide a robust avenue to initiate wealth accumulation.