Real estate is a proven path to wealth, but owning physical property isn’t the only way to get in on the action. Note investing is an alternative that allows you to invest in real estate without the headaches of being a landlord or buying a house. By stepping into the shoes of the lender, you can generate income from real estate without ever buying a house. In this article, we’ll explore what real estate notes are, why they can be a better option than traditional real estate investments, and how to get started with note investing.

What Are Real Estate Notes?

Real estate notes are the legal agreements that detail the terms of a loan secured by real property. When someone buys a home with a mortgage, the bank holds the note that requires the borrower to make regular payments. With note investing, you can purchase these notes from banks or private sellers, meaning the borrower pays you directly.

There are two main types of real estate notes:

• Performing Notes: These are loans where the borrower is current with their payments.
• Non-Performing Notes: These are loans where the borrower has fallen behind, offering the potential for bigger discounts but higher risk.

Why Note Investing is Better Than the Alternatives

While owning physical real estate has its perks, note investing offers several advantages that make it a compelling alternative:

• Lower Entry Costs: Investing in real estate notes often requires less capital than buying property outright. You’re purchasing the debt, not the physical asset, allowing for more flexibility.
• No Property Management: As a note investor, you’re not responsible for property maintenance or dealing with tenants, which reduces your workload and headaches.
• Consistent Cash Flow: With performing notes, you receive regular payments from borrowers, providing steady income.
• High Returns: Non-performing notes can be purchased at a steep discount, allowing you to either work with the borrower to get payments back on track or pursue foreclosure to sell the property at a profit.

Note investing makes it easy to invest in real estate without buying a house!

How It Can Work for You

Note investing can work for a wide range of investors, whether you’re looking for passive income or seeking higher-risk, higher-reward opportunities. For example:

• Passive Investors: Performing notes offer consistent, passive income with minimal involvement, as you simply collect payments.
• Active Investors: Non-performing notes offer the opportunity for greater returns, but require more active management to either negotiate with the borrower or manage the foreclosure process.

How to Get Started Investing Without Buying Property

If you want to get involved in real estate without buying a house and if note investing sounds like the right fit for you, here are a few steps to get started:

Education: Learn the ins and outs of note investing by researching, attending webinars (like NoteSchool’s free live training), or taking courses.

Set Your Investment Goals: Decide whether you want steady income from performing notes or are willing to take on more risk with non-performing notes.

Find Notes: You can purchase notes through banks, mortgage brokers, or note marketplaces. There are also auctions where non-performing notes are sold at significant discounts.

Do Your Due Diligence: Carefully evaluate each note, understanding the underlying property, borrower history, and the terms of the loan before you invest.

Ready to achieve success in note investing? The best time to start is now! Take advantage of the resources below to learn from industry experts, connect with a thriving community, and unlock your full potential in creative real estate financing.

Your journey toward financial freedom begins today—don’t wait to take the next step!

Whenever you’re ready… here are 4 ways we can help you start your journey into note investing: