2026 Note Market: Performing Notes as the New Private Credit Play?

Question

Hey Everyone,

With real estate equity fundraising slowing but private credit strategies booming (debt funds now grabbing bigger shares of originations per MSCI), I'm seeing performing notes emerge as a standout opportunity for 2026.

Key trends I'm watching that could impact your note strategy:

• Investor loan defaults rising (especially fix-and-flip and multifamily debt maturities), creating more inventory for buyers like us who focus on seasoned, clean-paying 1st lien residential notes.​
• Yields holding strong at 9-12% for well-equitied performing notes, beating CDs by 2-3x while offering real downside protection.​
• Seller-finance & hard money surging amid tight institutional lending—great for secondary buyers targeting re-performing assets.​
• Liquidity improving via digital platforms, but smaller regional banks offloading non-core notes to meet capital rules (14% YoY sales velocity up).​

Question for the group: With this shift toward debt over equity, are you buying more performing notes to hold for yield, or repositioning into workouts/NPLs? What's your target LTV and seasoning right now?

Jamie Bateman · Answer

@Frances Cammack do you own notes yourself? What is your background in this space?

Don Konipol · Answer

I can see the use of term cash buyer where debt financing is the usual, or at least a large percentage of buyers, such as purchasing real property. When I’m selling a (commercial) property one way I divide buyers is into how they plan to pay for the property as follows:

Cash - their own

Third party financing - 25% + cash down

Third party financing - 20% cash down or less

Seller financing - 40% cash down

Seller financing - 20 -40%down

Seller financing - minimal cash down

No money - want seller to carry second behind institutional first.

While we all prefer a”cash” buyer, I’ve sold property to ALL these type buyers at one time or another. The last is now almost impossible to do legally; so you might as well cross it off the list.

Chris Seveney · Answer

That is a tell tale sign. I love when people say they have "cash buyers" for notes as I am curious what other types of buyers are out there? Its not like you can put these on a credit card or get a mortgage for a note (you could get lender to lender financing but that is not something that is easily obtained)

Ivan Terrero · Answer

Credit buyers?

Barter buyers?

2026 Note Market: Performing Notes as the New Private Credit Play?

2026 Note Market: Performing Notes as the New Private Credit Play?

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