Anyone here dabbling in notes?

[Charles Kennedy]

Lately I’ve been spending more time looking at notes as an investment strategy. It’s definitely a different world compared to rentals or flips, but I like the idea of buying the paper instead of the property.

For those who’ve been at it a while — what’s been your biggest “aha” moment in the note space?

[Jackie Carmichael]

Charles — great question. Notes are definitely a different lane than rentals or flips, but they can be powerful if you understand the mechanics.

A couple of “aha” moments I’ve seen with investors:

• You’re buying the borrower, not just the paper. The performance of the note depends heavily on the borrower’s ability and willingness to pay, not just the underlying collateral. That shift in mindset changes how you underwrite.

• The collateral still matters. Even though you’re not buying the property, you need to think like you are. Exit value, location, and condition all matter if you ever have to take the property back.

• Leverage looks different. Instead of traditional mortgages, many investors use note-on-note financing — borrowing against the note itself to recycle capital and scale faster. It’s a way to treat notes as a repeatable business instead of one-off deals.

On my side, I work with investors who buy non-performing loans secured by real estate, and we help them use short-term bridge capital to scale. That way, they’re not tying up all their cash in one note but can build a portfolio.

Curious — are you more interested in performing notes for passive income, or are you leaning toward non-performing where you can buy at a bigger discount and work the asset?