I have worked in the IT industry since graduating from UC Davis in 1997. In that time, I’ve seen two major stock market bubbles burst, and I’ve witnessed first hand the impact of a major stock market correction. Like many people, most of my retirement savings has been invested in the stock market through various employer 401k plans.

I’ve long been interested in investing in Real Estate as a way of diversifying my investment portfolio. Some people are very successful in the “fix-and-flip” business, but that has never held much appeal to me personally, because I’ve never had much desire to “swing a hammer”.  However I have been very interested in owning rental property as a passive income stream and a way to build long-term wealth, as described in Robert Kiyosaki’s Rich Dad Poor Dad.

However, living in California, for someone like me that’s not sitting on a big pile of cash, it is difficult to buy local rental property in a good area that generates positive cash flow.  I’m defining “Cash Flow” as the amount of money generated by each month by rent, minus the cost of property maintenance, taxes, vacancy, and the monthly loan payment. The reason that cash flow is hard to generate from rental property in California is that the cost of housing is relatively high as compared to the cost of rent.

Buying rental property outside of California is possible and many people are successful doing this. However, I’ve been uncomfortable with the thought of being so dependent on an out-of-state Property Management  company to handle things like property maintenance and tenant management. I’ve heard many horror stories such as when property management companies charge exorbitant amounts of money to perform relatively minor repairs to the property. Again, many investors own rental property outside their own local area, and are very successful in doing this. I’m just stating what my own comfort level with investing in out-of-state rental property has been in the past. Furthermore, I don’t rule out the possibility of owning rental property outside my home state at some point in the future.

If you are interested in investing in passive, “turn-key” rental property, I would recommend looking at Real Wealth Network.

In fact, it was through Real Wealth Network that I first learned about an alternative way to invest in Real Estate, generate consistent cash flow, and do it all as a passive investment. RWN hosted a 1 hour presentation in Sacramento by a gentleman named Eddie Speed. What I learned in that 1 hour presentation opened my eyes to a whole new way of investing in Real Estate. In short, I learned about investing in “Notes”, i.e. the promissory notes that are secured through a Mortgage or Deed of Trust to a piece of Real Estate.

I’ll go in to more detail about Notes in subsequent posts, but for now, let me summarize the reasons I like Notes as an investment vehicle:

• Consistent Cash Flow
• Investment Secured by Real Estate
• The ability to Invest Anywhere in the Country
• Never having to “Swing a Hammer” or “Be the Landlord”