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Mortgage Notes Are Good Real Estate Investments

Published by U.S. News > Money on December 3, 2019

People who want to invest in real estate but don’t want to be landlords might consider buying mortgage notes.

The loans that borrowers take out to purchase a property are mortgage notes. Banks or lending institutions make the loans, and often these entities will sell those real estate notes to free up their cash flow. Note buyers step into the role of the bank, sometimes buying notes at a discount, and collect the borrower’s principal and interest rate payment, says Greg Forest, a real estate advisor at Engel and Volkers in Palm Beach, Florida.

Mortgage notes can be a good real estate investment for people seeking passive income, but investors should know what they’re buying. It takes some research into understanding the borrower’s financial situation, property values and the different types of notes available. Here’s what you need to know when diving into the world of investing in real estate mortgage notes:

• Types of mortgage notes.
• Vetting borrowers.
• Buying mortgage notes.

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