What is a note?

A note is the piece of paper that is the promise to repay a loan such as a 1st or 2nd mortgage.  It is backed by real estate meaning the promise is secured by knowing you’ll own the property in the event the promise is unavoidably broken. 

Notes that are held by individuals, not banks, are seller financed, or owner financed, notes. These notes are desired as investment instruments for people who prefer to diversify their holdings.

When a borrower pays on time then it is considered a performing note.  When the borrower stops paying then it is called a non-performing note. ​While this is not the preferred path, we know plenty of ways to make the best of this situation.

Why invest in notes?

Notes are recession proof - Note investors have opportunities to purchase performing and non-performing notes and get higher rates of return on investments than with traditional CDs, stocks or mutual funds. Adding note investments to your portfolio increases your portfolio’s diversification while decreasing its exposure to volatile markets.