The Power of Private Mortgage Note Investing

EquityBuild Finance

Why Would Someone Borrow From a Private Individual?

Most banks only want to make long-term loans that will provide them a regular income stream, requiring little additional effort. They don’t want to deal with short-term or rehab lending. Banks are notoriously slow to process loans. On the other hand, most sellers won’t wait for a bank to process a mortgage application. The best deals are fought over and won by cash buyers or investors with access to quick capital. This speed of capital is why buyers are willing pay higher interest rates.

The Advantages of Private Mortgage Notes


  • Real estate is a tangible asset, unlike paper investments
  • Less volatile than the stock market
  • Returns paid monthly
  • Greater control over when and how much you invest

Stability of Private Mortgage Notes

Despite the upheavals in the real estate marketplace during the Great Recession, the CoStar Commercial Repeat Sale Indices (CCRSI) show commercial multifamily housing prices having recovered and passed their prerecession peak in the vast majority of metro areas. Plus, multifamily housing has outperformed all other classes of commercial real estate since 2011.
Property value stability isn’t the only reason why private mortgage notes are such a stable investment:

  • Demand for housing is increasing at an astounding rate. Yet, thwe supply of housing available is not keeping up with this growing demand. Every new child born will need housing.
  • High school graduates will find their own homes and start their own families. This pressure on the housing industry means there will always be a demand for new homes.
  • The share of renters has remained high following the Great Recession, and rents rose 22.3% on average in the 50 largest markets between 2006-2014 according to a 2016 Trulia report.

What is a Private Mortgage?

A private mortgage is a loan made by individuals or other private parties for the purchase of a real property. The loan is secured by the borrower’s property as collateral. While home buyers traditionally use financial institutions like banks and mortgage companies to finance their purchases, buyers of commercial residential multifamily housing – in other words, apartment buildings – frequently seek out other sources of capital. This market has grown as banks have become increasingly reluctant to make such loans. Investors who fund private mortgages usually receive above-market rates of return. Where commercial loans may be going for 4.25-6.25%, a private mortgage note can achieve double-digit returns with the added benefit of a first lien position. The note investor receives a substantial return on a low-risk investment, while the borrower receives access to the capital needed to purchase and/or rehab a property.

EquityBuild Finance

The first reason is the most important.
EquityBuild Finance believes strongly in private mortgage notes, because unlike other paper investments, they are backed by tangible assets (i.e. multiunit commercial residential buildings) that will always have value. An investor who owns stock in a company that has folded is out of luck. But if a borrower were to default on a private mortgage note, the noteholders would simply take possession of the property and start earning cash flow once again.

EquityBuild Finance


EquityBuild Finance’s private mortgage notes finance properties that are carefully identified, sold or held, rehabbed and managed by our sister company EquityBuild, based on its proprietary econometric model that identifies properties with strong upside and minimal risk. EquityBuild has quality contractors on call to rehabilitate commercial multifamily properties. The property is stabilized, and then its value continues rising while the property produces cash flow. A renting family gets a substantially improved home, while the investor gets a solid return backed by a valuable property. Having the knowledge, experience and resources to offer both sides of the equation is a unique and enormous competitive advantage that reduces risk for our investors even further.


If you’re excited about the opportunity of private mortgage notes, but concerned you’re going to miss out on a chance to invest, we have good news for you: People can invest in private mortgage notes with funds from their self-directed retirement accounts such as IRAs, 401(k)s and SEPs. Lending from your retirement account can be an outstanding way to get higher returns than your account would otherwise achieve, while still receiving all the tax benefits.


EquityBuild Finance is the key to learning how to maximize your returns and minimize your risk. We have decades of experience in real estate investing. We have completed deals on more than 1,100 properties and have analyzed thousands more. We have spent years refining a proven system that allows regular people to learn how to invest in solid and secure private mortgage notes without having to become real estate experts themselves. Now, we’re able to offer this remarkable opportunity to you.


This is not a specific offering, an offer to sell securities or an invitation for offers to purchase securities. Securities may only be sold by exemption or registration. Incentive applies to accredited investors only. *There is a standard deviation of 10% on NOI (net operating income). NOI is a projection based on knowledge at the time of its preparation that may deviate 10% from the represented value to account for market fluctuation in rents and expenses correlated with commodity pricing. Copyright © 2016 EquityBuild Finance LLC, All rights reserved.