Real Estate Note Investing: How To Generate Passive Income Using Mortgage Notes

Real estate investors often start their journey by purchasing their primary residence—some branch out into active investing such as flipping houses while others decide on wholesaling real estate.

Real estate note investing can be a great way to build generational wealth and create income.

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What is Real Estate Note Investing or Mortgage Note Investing?

If you have ever purchased a property, you might have noticed that sometimes the lending institution you signed at closing differs from the one now holding your mortgage.

Mortgage Note

A mortgage note, also known as a real estate lien note or borrower’s note, is the document you sign when you take a mortgage.

Promissory Note

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In most cases, the mortgage note is usually accompanied by another note that outlines the conditions of paying back the lending institution.

Types of Mortgage Notes or Real Estate Notes

There are various types of mortgage notes in different categories. The four leading real estate note investing categories include lien position, loan performance, asset class, and type. Here is a breakdown of the categories.

How to Make Money Investing in Mortgage Notes

Investing in mortgage notes, otherwise known as real estate note investing, is an innovative and safe way that investors use to make money from real estate investments.

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