Why It Pays To Buy Real Estate Debt

In today’s economic climate, inflation is affecting millions of people in a variety of countries across the globe and putting them in debt.

According to Nerdwallet, consumer price inflation increased a whopping 19.32% from January 2020 to April 2024. Yes, you read that right: That’s an almost 20% increase over 4 years. When you hear the word debt, you may automatically have a negative reaction. No one wants to be in credit card debt, have debt from school loans, or be on the hook for a consolidation loan.

Here at Finresi, we have a different view of the word debt. To us, debt is opportunity. Debt is good. If you own real estate debt, you can generate income and set you up for retirement. Sounds crazy, right?

Let us explain how passive investing in real estate debt can help you beat inflation and build your wealth.

What Is Real Estate Debt? When you invest in real estate debt through Finresi, you are purchasing a debt instrument secured by real property. Traditionally, real estate investors achieve returns through capital appreciation (an increase in property value) or rental income. However, with Finresi, you invest in the loan that finances the property. As the borrower makes payments on this loan, you, as an investor, receive distributions from these payments. The loan investments that Finresi offers to investors Bridge Loans/Hard money loans : short-term financing option typically used to cover immediate cash flow needs or to finance real estate projects until permanent financing can be secured. These loans are often secured by the property and have higher interest rates and shorter repayment terms compared to traditional loans. At Finresi, we connect investors to first-lien private real estate loans. This ensures that Finresi and our investors have first priority for payment in the event of borrower non-payment or default. Not all investment platforms provide this level of protection, so it is important to thoroughly research and understand the safeguards in place for investors before committing your funds to any platform. The Benefits of Buying Real Estate Debt There are plenty of ways to earn returns, but passively investing in real estate is a pretty popular option. Let’s go over some of the perks of having access to this asset class. Low-effort and hands-off: Active investors in real estate are physically involved with the property, managing upkeep and dealing directly with tenants. They have to navigate the dynamics of the real estate market and stay vigilant with their understanding of its conditions to source their deals. When you buy real estate debt, your main task is to collect the interest payments. It’s that simple. A lower risk profile: When you invest by physically owning a property, you have external factors like potential vacancy of that property and maintenance issues to deal with. When your investment is in the loan rather than the property, your personal risk is mitigated by the collateral that is the property itself. A steady stream of income: Because the borrowers are making regular payments on their loan, you as an investor receive a steady stream of income in the form of returns. At Finresi, investors can earn 10-12% APY with monthly distributions on their investments. It almost feels like an ongoing game to try and beat out inflation and build wealth, even for people who have typically been able to put a good amount of savings away month after month. Empowering our investors to diversify their portfolios with first-lien protected real estate notes that are low-risk and hands off is our passion, and we are so excited to bring this asset class to the forefront.

Make sure to sign up today on our website as an accredited investor to see our offerings or get in touch with us here to talk more about how you can build your wealth with monthly returns.