What Are First Position Commercial Mortgage Notes?

Barry Kornfeld pic

Barry Kornfeld
Image: fftaxgroup.us

Barry M. Kornfeld is an experienced financial advisor based in Boca Raton, Florida. As a principal of First Financial Tax Group, Barry Kornfeld advises clients on alternative income and wealth management opportunities, including first position commercial mortgage (FPCM) notes.

For individuals planning for, or who are already in, retirement, first position commercial mortgage notes present an attractive alternative income source. First position commercial mortgage notes allow clients (of a given financial institution) to act as lenders of private third party loans. Secured by high value commercial real estate properties such as multifamily residential buildings, office buildings, and retail centers, these bridge loans yield monthly interest payments for a relatively short duration. At a minimum, they provide returns of six percent for one year, paid out monthly.

FPCM notes are a lower-risk option for individuals seeking alternative monthly income. As indicated by their name, first position commercial mortgage notes allow lenders to hold the first lien on a commercial property. This ensures that they hold priority over all other lien holders, giving them greater security.

First position commercial mortgage notes typically require a low minimum initial commitment of just $25,000 and may be strategically incorporated into a diverse array of financial portfolios. To take advantage of this opportunity, lenders may use funds from a variety of accounts, including trusts, joint accounts, or IRAs.

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