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Tips for Buying Other Assets

Do Your Due Diligence

Before purchasing any "other asset," such as private notes, mortgages, or receivables, it's essential to perform thorough due diligence. This means understanding the asset's underlying value, the creditworthiness of any payors or counterparties, and confirming that all documentation is complete and legitimate. For example, if you're buying a note, request original documents, payment histories, and supporting collateral details. Remember, in private investments, there is often less transparency than in public markets, so you must take extra steps to uncover hidden risks.

Understand Liquidity and Exit Options

Many alternative assets, especially private ones, are not readily tradable. This means you may have to hold your investment for an extended period or sell it at a discount to exit quickly. Before buying, ask yourself: "How will I get my money back?" and "Is there an active secondary market or any buyers lined up?" Understanding your exit options and the likely timeline is crucial. Don't tie up money in an asset you're not prepared to hold for its full term or until an appropriate buyer emerges.

Structure Deals with Legal Protection

Proper legal structure and documentation are critical when buying other assets. Hire an attorney experienced in your asset class to draft and review contracts, assignments, and any security agreements. Insist on clear terms about default remedies, payment schedules, and recourse in case things go wrong. If the asset can be perfected (such as through a UCC filing for receivables or recording a mortgage), execute those steps promptly. Strong legal protection increases your chances of collecting what you're owed and reduces the risk of costly disputes.