Who's Still Buying Performing Notes in 2026?

Question

Hello Everyone!

Fellow investors - noticeably fewer active buyers in performing notes lately. Forums quieter, slower responses.

What's changed for you 2025-2026?

• Servicing costs killing <$100K deals?
• Pricing standoffs (sellers anchored to 2021)?
• Ops RE (flips/rentals) better cash flow?
• Institutions dominating pools?
• Capital deployed elsewhere?

Active note buyers:

• Current target sizes/yields vs 2023?
• Sourcing working (or not)?
• Servicing hacks that matter?

Sellers holding:

• Waiting for rate cuts?
• Borrower risk concerns?
• Tax timing?

Notes aren't dying - evolved to precision niche. Curious about your take + one 2026 data point.

Chris Seveney · Answer

Interets rates have been pretty stable (exclusive of the recent oil hike), but with them stabilized and lower and banks paying lower interest you would think people would still be happy with a solid 7-9% on a performing loan - especially with low equity as the risk is significantly lower. Days of gettin 12% on 40% LTV is not happening unless you are originating the paper yourself, but getting it on secondary market is harder - but still can be had with some of the fix and flip loans - but those also hold significant risk

Chris Seveney · Answer

I am curious - what tax opportunities are there that you have in notes? Every CPA we have ever discussed this with is it is interest income, are you getting around it being interest income?

Jacob Camhi · Answer

Seeing the same thing on my end, the performing note buyer pool feels thinner than it did a couple years ago. 2025-2026 has mostly been about two things: servicing costs and yield expectations. Sub‑$100K UPB is hard to make pencil once you bake in servicing, reserves, and any legal, so the focus has shifted to roughly $75K-$250K notes where you can still clear around 9-11% yield instead of the 7-9% that felt acceptable in 2023. A lot more paper is getting passed on because sellers are still mentally anchored to 2021 pricing and it feels better to sit in cash than stretch on clean firsts at 6-7%. Operational real estate that actually cash flows has gotten more attractive, so notes have to compete with that. On sourcing, the easy stuff feels picked over: fewer strong tapes from the usual brokers, more noise in the email blasts, so most of what is actually getting bought is coming from smaller originators and individual seller‑finance holders where there is already a relationship. Short version: buying less, buying a bit bigger, pushing for higher yields, and trying not to force deals just because 2021 was more fun.

Bo Smith · Answer

Notes market got tighter but here's what's working: stop hunting one by one, build an actual sourcing pipeline. Score leads, automate follow-ups, treat it like a system not manual grind. Are you still doing everything manually or running it systematically?

Jay Redding · Answer

We are still investing in performing 1st lien seller financed notes.  We are mainly purchasing partials to lower our risk but a large enough partial with full collateral assignment to allow the seller to recapitalize if they are into the deal as they should be.

Chris Seveney · Answer

We have seen a disconnect in the performing market since pre-Covid period. During that time you could target 12+ returns on re-performing loans, and newly originated paper would be 10-12%. Many investors today are trying to seek double-digit returns where yields have just compressed. People should be happy at 9-11% on a well-underwritten loan with low loan-to-value.

The other issue is there are a lot of properties that could be sold or financed with loan values between 50,000 or greater. Due to home appreciation it's much more difficult to find those lower price loans. If you find them, they're typically on properties that are in extremely poor areas or need significant work.

Dan Deppen · Answer

Mentally anchoring on past market conditions is the fatal flaw of most note investors. Many are still anchored on the market conditions from 10 years ago.

Something I've learned in the last 18 months or so is that the pool of note buyers and note creators are completely different in terms of personality. Note 'buyers' tend to be wildly conservative and will look for any reason not to do a deal. Most people who claim to be note buyers I suspect don't actually buy notes at all. Most note creators tend to be super aggressive and rotated way in the other direction. Also, note buyers and creators tend to not know one another, which is weird to me because the 2 communities should have a symbiotic relationship. That's why the top tier note creators deal with banks and larger institutions when they need to recapitalize.

Don Konipol · Answer

“Ops RE (flips/rentals) better cash flow?”

We have minimum ROI requirement (adjusted for risk) that has in the last 3 years eliminated our ability to purchase notes and obtain our require risk adjusted return.  Our syndications and funds are still able to obtain  this return thru our originating mid size ($1 - 5 million) commercial mortgage notes.

For my personal portfolio, as my notes pay off I’ve reinvested in selected equity REITS.

Who's Still Buying Performing Notes in 2026?

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