What Is Real Estate Note Investing

What Is Real Estate Note Investing | Mortgage Notes

note investing

Investing has never been so exciting as it is right now.

With new investment opportunities popping up everyone is on the hunt for the next big thing.

For successful investors finding investments that generate passive income is a diamond in the rough.

Passive income is a hot topic amongst financial advisors. What’s not to love about easy money?

That is why real estate investing is one of the most common investment types.

House flippers take huge risks with flipping properties and need a lot of capital to get started.

For those that prefer a hands-off approach to their investments, note investing takes the passive income with minimal risks.

Once a note is purchased you can start profiting from an investment without any additional steps.

Looking to build out your portfolio? Here are 3 reasons to start note investing.

1) Easy Investments

Never heard of mortgage note investing before? No need to fear, note investing is one of the easiest and simplest ways to invest in real estate.

Here is a quick breakdown of how note investing works.

When a property is purchased, buyers sign a promissory or mortgage note.

Lenders or banks can sell these notes to increase their cash flow and equity.

Note Investors can purchase these notes and receive the interest from these loans, and can purchase them at a discount from the lenders.

So why is note investing an easy investment? For the minimal work required to profit from a note.

Note investments are easy to find, easy to invest in, and require minimal oversight.

Here is how it is easy to start note investing.

  • Finding an Investment: Many lenders, banks will sell notes to improve their cash flow. You can reach out to any number of banks, lenders, or even note brokers to find a note investment for sale.
  • Purchasing A Note: Notes are sold at a discount, and have many payment options, from cash to purchased thru an IRA, and many more!
  • Profiting From A Note Investment: Many lenders will process and handle your note once purchased, meaning the note payments will be sent directly to you. There are many ways you can profit from a note that we will cover later.

One of the top reasons investors are interested in note investments is simply because they are simple and easy to manage.

Depending on your experience you can have a hands-off or hand-on approach to your investment as desired.

2) Options

For investors searching for flexibility real estate investing offers endless possibilities.

Whether you choose to be hands-off or hands-on with note investing you have lots of options for your note investment.

There are many ways you can customize your note investment.

From The type of notes, how your purchases, and how to profit from a note investment.

You have so many options for how to invest in mortgage notes.

You can find mortgage notes that easily fit your ideal investment style and long-term plans.

note investingMortgage loans can be broken down into several sub-categories, such as Secured or unsecured, Private notes, or institutional notes.

Secured notes have tangible assets ties to the loan, such as credit, or even the property itself.

Private loans may come from small private or hard money lenders, while institutional loans will come from large banks.

Some investors even crowdsource note purchases.

You can also choose what loan position to take, with first or second position notes.

Keep in mind that second position notes have higher risks than first since first position loans are paid first.

For investors Note investing is an exciting and secure way to earn from an investment.

The options for how you profit from a note investment are endless making it a perfect investment opportunity.

3) Profitability

Is note investments profitable? Some studies say that note investing can bring the same returns as house flipping depending on your note.

Once you own a note how you choose to profit is entirely up to you.

You can flip, sell, wholesale, refinance or just gain passive income from your note as well.

Depending on your note type, your note performance you can sell to other borrowers or banks.

Note Profitability:

  • High Yield Returns – Note investments rates of return that are often higher than the bank’s traditional low yield bonds; and higher than most stock dividends.
  • Monthly Income – Notes easily generate monthly income for the note holder, making it a source of predictable passive income.
  • Rollover Options – Some lenders will offer options to automatically roll over your investment so you don’t miss out on earning interest or future investment opportunities.

Depending on your note, your risk asset, and investment style the ability to profit off notes can be endless.

From passive monthly income to large one-time payouts, your profitability from an investment depends on your note investing choices.


Note investing is a great way to start investing in real estate without the risks of tenants, repairs, or buyers.

With flexibility on investments, it is easy to find an investment that best suits you.

You can learn more about how to invest in mortgage notes here. 

Here are 3 Reasons To Start Note Investing:

  • Easy Investment
  • Options
  • Profitability

note investing

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