{"id":184976,"date":"2025-09-30T11:00:14","date_gmt":"2025-09-30T17:00:14","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=184976"},"modified":"2025-09-30T11:00:17","modified_gmt":"2025-09-30T17:00:17","slug":"why-investing-in-real-estate-notes-might-make-the-most-sense-right-now","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/why-investing-in-real-estate-notes-might-make-the-most-sense-right-now","title":{"rendered":"Why Investing in Real Estate Notes Might Make the Most Sense Right Now"},"content":{"rendered":"\n

This article is presented by <\/span>Connect Invest<\/span><\/a>.<\/span><\/em><\/p>\n\n\n\n

Missed the last housing cycle? You’re not alone. Pending home sales fell by 0.4% in July, continuing a three-year trend of slugging along. And it’s not likely to change anytime soon\u2014there are <\/span>36% more sellers than buyers<\/span><\/a>, the <\/span>largest<\/span> gap since records began in 2013. <\/span><\/p>\n\n\n\n

With a buyer’s market looming and uncertainty that it will <\/span>get better<\/span> anytime soon, <\/span>plenty of<\/span> investors are parking capital, but that doesn\u2019t mean it has to sit idle.<\/span> There are investment vehicles offering<\/span> predictable returns, asset-backed security, and low minimums without the friction of traditional ownership. Some of those, like real estate-backed notes, make it easy for your cash to get a higher return than if you put it in a savings account. <\/span><\/p>\n\n\n\n

What Are Real Estate Notes? <\/span><\/h2>\n\n\n\n

A real estate note is <\/span>simply<\/span> a document <\/span>indicating<\/span> a debt, <\/span>like<\/span> an IOU for financing real estate.<\/span> When a borrower takes out a loan and agrees to the payment and interest terms, these notes <\/span>are created<\/span>. <\/span>The lender then sells these debt instruments to investors, who <\/span>can<\/span> collect the <\/span>payment<\/span> until <\/span>it<\/span> is paid off<\/span>.<\/span><\/p>\n\n\n\n

There are different types of real estate notes, including first-position and second-position liens, which indicate <\/span>how secure<\/span> the note <\/span>is<\/span> and <\/span>who gets paid out first<\/span>.<\/span> <\/span><\/p>\n\n\n\n

Why Invest in Real Estate Notes? <\/span><\/h2>\n\n\n\n

Investing in real estate notes might make sense for several reasons. For one, it allows you to earn a <\/span>passive income stream<\/span><\/a>. All you have to do is buy the note, and you are entitled to the payments.<\/span><\/p>\n\n\n\n

It\u2019s also hassle-free, as you don\u2019t need to manage a property. But you get the advantage of diversifying your investments with exposure to real estate. And in many cases, the interest you receive is higher than that of a savings account. <\/span><\/p>\n\n\n\n

Real estate notes also <\/span>come with<\/span> higher liquidity, which can be advantageous for investors who don\u2019t want to <\/span>get<\/span> locked into owning a property for years.<\/span> And with housing staying on the market longer these days, that\u2019s advantageous for investors who want the ease of selling quickly.<\/span><\/p>\n\n\n\n

Of course, there are risks involved. If the borrower defaults and doesn\u2019t pay back the loan, you won\u2019t receive payments, or you could even lose your initial payment for the notes.  <\/span><\/p>\n\n\n\n

Where to Buy Real Estate Notes <\/span><\/h2>\n\n\n\n

Any individual or fund can buy a real estate note. There are several ways to invest in real estate notes, including through banks, funds, and online platforms. <\/span><\/p>\n\n\n\n

Just <\/span>like<\/span> any real estate investment deal, you should <\/span>do your<\/span> due diligence<\/span><\/a>.<\/span> Find out<\/span> the <\/span>loan-to-value ratio<\/span><\/a> of the property so you know how risky it is, and research the history and condition of the property to discover its marketability and value.<\/span><\/p>\n\n\n\n

You can also buy notes for a pooled portfolio of real estate, which can help diversify your investment even further. <\/span>This<\/span> means instead of buying notes for <\/span>one<\/span> property, you would <\/span>buy<\/span> notes that cover a range of collateral-backed real estate loans <\/span>that <\/span>are<\/span> vetted<\/span> by platforms.<\/span> <\/span><\/p>\n\n\n\n

One platform that makes it easy to invest in a diversified portfolio of real estate properties is Connect Invest, <\/span>with<\/span> which you <\/span>can<\/span> invest in private residential and commercial real estate projects with a starting investment as low as $500 and time commitments as short as six months.<\/span> <\/span><\/p>\n\n\n\n

Final Thoughts <\/span><\/h2>\n\n\n\n

Real estate notes are one way to get exposure to the housing market without having the overhead of owning a property. With the market still in flux, it could be a way to wait out the housing crunch while earning passive income.<\/span><\/p>\n\n\n\n

See how <\/span>Connect Invest<\/span><\/a> helps you stay active in real estate, even if you\u2019re waiting for better buying conditions.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

This article is presented by Connect Invest. Missed the last housing cycle? You’re not alone. Pending home sales fell by 0.4% in July, continuing a three-year trend of slugging along. […]<\/p>\n","protected":false},"author":613681,"featured_media":183929,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1091],"tags":[],"class_list":["post-184976","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/184976","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613681"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=184976"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/184976\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/183929"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=184976"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=184976"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=184976"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}