Mortgage Notes 101: Where To Begin When Investing In Mortgage Notes

by May 11, 2022

If you want a profitable real estate investment that is also a reliable way to earn passive income, you might like mortgage notes. Although mortgage note investing is a great way to have big financial gains, not a lot of people know about it or know how to go about it. Equipped with the right tools and the financial know-how, mortgage note investing can easily bring you a favorable return on investment.

But what exactly are mortgage notes, and why should you invest in them? This article will tell you everything you need to know about mortgage notes investments in New York and how to rake in a profit.

What Are Mortgage Notes?

Mortgage notes, also known as real estate lien notes or borrower’s notes, are promissory notes secured by a mortgage loan. These notes can either refer to a mortgage or a Deed of Trust, but of course these depend on what state you’re doing business in or which security instrument you’re using.

Investing in real estate or mortgage notes is buying real estate without needing to manage it or becoming a landlord. Instead, in this kind of setup, the homeowner, instead of the bank, directly pays the lender. This then lets you collect a monthly payment, including both the interest and principal, when you purchase a mortgage note. Therefore, it is a constant stream of revenue similar to what you would get from a rental property, except unlike a landlord, there is no need to manage the property.

Basics of Mortgage Notes

As a note investor, you must consider the performance of the note and the priority of the lien. But before you get into the thick of note investing, you must first know the two basic kinds of mortgage notes available on the market. These are: performing notes and non-performing notes.

In performing notes, the borrower makes timely payments on the loan. When a lender originates a loan to a borrower they may then sell that loan to an investor who is looking for an asset that pays regular income. On the other hand, non-performing notes or non-performing mortgages are notes that involve lenders and investors who sell loans that are in default. You can generate income from non-performing notes by modifying the terms or foreclosing the loan.

If you’re looking to generate steady passive income, you should consider getting a performing note. However, in contrast with a non-performing note, the performing note is definitely cheaper. But with this vast difference in price comes difficulty in turning in profitability. Keep in mind that the nature of non-performing notes, specifically verging on being in default, is understably harder to make profitable. Performing notes tend to trade at or very close to their face value, but they generate stable income from day one.

There are many ways to start investing in mortgage notes. However, keep in mind that all investments carry some form of risk, so make sure you understand the risk factor before investing.

Convinced that mortgage note investing is for you? Consider buying distressed mortgage notes in New York for passive income. Luckily for you, you’re on the right page! Look no further than Melanin Homes for your real estate mortgage notes needs.


Discover positive cash flow investment properties with high returns when you choose to be a buyer under our preferred buyers’ list here at Melanin Homes. Melanin Homes is a real estate solutions company. We are full-time investors and specialize in finding assets with high competitive returns that you may not be used to hearing. Here at Melanin Homes, we deliver on our promises.

With our proprietary system we find unique opportunities to invest in real estate through privately held mortgage notes, first trust deeds, contract for deeds, and land contracts. We then pass these deals along to our preferred buyers who are looking for great competitive returns or positive cash flow. Be one of them by investing in mortgage notes in New York today.

Interested in investing in real properties in New York City? Look no further because you’ve come to the right place! Here at Melanin Homes we offer a wide-variety of real-estate solutions for all of your property needs! We have mortgage notes for sale to make investing in real estate easy as one, two, three.

So, are you interested in getting on our Preferred Buyers List (it’s free) so you can be notified of each new asset or investment property available? Reach out to us here +1 440-305-5195 today!

Schedule a FREE consultation

Enter your information below to connect with me directly

Recent Blog Post

Maximize Your Investments In Real Estate with Mortgage Notes!

Maximize Your Investments In Real Estate with Mortgage Notes!

There are many benefits to investing in real estate. With well-chosen assets, you can enjoy predictable cash flow, excellent returns, tax advantages, and diversification—and it's definitely possible to leverage real estate to build wealth. One investment opportunity...

Navigating Through Your First Mortgage Note Investment In New York

Navigating Through Your First Mortgage Note Investment In New York

Real estate investing opens many doors for those who are looking to make a steady stream of passive income. And one way you can build wealth through real estate is mortgage note investing. It comes with a lot of advantages and provides unique possibilities. But of...