Anyone here shifting from rentals to note investing?

Question

Lately I’ve been noticing more investors moving away from direct property ownership and getting into note investing — either buying performing notes for cash flow or non-performing ones for the upside.

I’m curious if anyone here has made that transition. What’s been your experience so far — smoother returns or more work than expected?

Denise Supplee · Answer

Hi @Charles Kennedy nice to meet you. I’ve added note investing to diversify alongside my real estate projects, and it’s been a great complement. Performing notes offer steady cash flow with less hassle than managing property. Non-performing notes can have more upside, but definitely come with more work. Overall, returns have been solid, just a different type of due diligence.

Elealeh Fulmaran · Answer

Notes can deliver smoother, steadier cash flow than rentals, but only if your diligence is tight. The real work shifts from toilets to paperwork: verify collateral value conservatively, scrub the chain of title and assignments, confirm enforceability, and study the payor’s pattern, not just their score. Performing notes feel set‑and‑forget until a servicer hiccup or insurance lapse; non‑performers can be great buys but demand clear timelines, workout tactics, and legal budget. Start small with one performing note through a reputable seller, set up servicing and insurance tracking, and build your playbook before chasing NPL upside.

Eric Gerakos · Answer

I have always done both. Need properties for tax write offs.

Jean G. · Answer

@Charles Kennedy That is interesting that you're noticing this shift as a trend. In the last year or so I have started buying non performing notes secured by CRE instead of more direct properties, but have not liquidated my portfolio of income properties yet.
As all strategies, it's always more work and less profitable than you may think originally, but what I did notice is that I am able to get my hands on more deals (we are able to buy more NPLs than pencil out than properties)

Lauren Sanford · Answer

@Charles Kennedy As I am sure you are aware of us as we been in the Note Space with our CEO starting in 2010. Notes can be a great diversification however too many are caught up on the Performing note cash flow and often forget about the NPL. The big push recently has been buying Hard Money/Short term commercial notes. If you can handle that most sellers will handle the draws.
@Jean

@Jean G. We get CRE's often on our site and emails due to being one of the experienced investors. We should connect to see if we can direct deal flow to you.

G. Brian Davis · Answer

I sold off my rentals in 2018. Today I invest passively, in a mix of private notes, JV partnerships, syndications, and funds, as a member of the Co-Investing Club.

I've found that it really helps to have 50 sets of eyeballs all vetting investments together. Makes it much easier to analyze risk.

To your question about notes, we typically issue the note as a new loan to an operator we've vetted together. We don't buy mortgage notes.

Anyone here shifting from rentals to note investing?

Anyone here shifting from rentals to note investing?

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