The sellers were looking to free up capital quickly

[Richard Dickson]

I’ve been working in the performing note space for a while now and recently completed several purchases of 1st position residential notes (1–4 units) that were 12+ months seasoned. The sellers were looking to free up capital quickly, and the transactions went smoothly thanks to transparent terms and fast closings.

On a related note, I’ve also been watching the tax lien market closely — noticing some changes in yields and competition over the past year.

I’d love to hear from other investors:

• Have you sold or purchased any seasoned performing notes recently? How was the process?
• For those active in tax liens, what’s your outlook for the rest of 2025?
• Are you seeing more crossover between lien investors and note investors?

Looking forward to exchanging ideas and learning from the community’s recent experiences.

[Patrick Roberts]

Quote from @James Mc Ree:

I am a newbie for note buying and still shopping for #1. I have a seller side strategy question.

I've come across several note sellers selling newly created notes with significant discounts, such as a $50k note created in the last few months with an asking price of $40k. The notes are all performing, but maybe only for a short time and some are new with no payments yet. I don't see any obvious problems other than the lack of seasoning, but that might be due to my limited experience. In DD, I ask Seller why such a large discount on a new note with no obvious problems other than it being new. The answer is always the same: some form of freeing up cash for another deal.

How does a note seller stay in business doing this repeatedly or is that a red flag of a scammer? I've seen a few sellers doing this, but haven't looked broadly, and did expose one as a scammer.

 Are these notes on vacant land? A couple thoughts:

- typically, the borrower is buying these properties for significantly more than it's worth in return for low or no downpayments. Pay close attention to property values and LTV coverage on these; they may be one step away from being unsecured due to lack of sufficient equity coverage

- a $10k discount on a new note is nothing. You will probably spend $1k-$2k just acquiring the note between DD and closing costs

- I would be leary of notes with little or no seasoning. Make sure you really dig into the credit risk of the loan if there is less than 12-18 months of seasoning

- the price point is concerning. A newly created note around $50k is either vacant land or a low-value home, which is likely to be Class D and very difficult to deal with in a nonperforming situation, especially considering that these buyers tend to have above average default rates

- if these are in fact low value properties, foreclosure costs can wipe out a lot of your equity as they are disproportionately large