So you want to invest in real estate notes, and you’ve figured out the type of notes your want to buy, but where do you find mortgage notes for sale? Here is my comprehensive list of note buying resources.
- Deciding What Type of Mortgage Notes to Buy
- Mortgage Notes For Sale Online
- Crowdfunding Websites
- Note Brokers and Funds
- Private Lending
- Buying Mortgage Notes From Banks
- How to Get Started
There are currently over 20 resources in this list where you will find all types of real estate notes for sale. I hope you find it useful.
Deciding What Type of Notes to Buy
As I mentioned in my main article on note investing, the type of note you buy will ultimately be defined by your investment goals and objectives. That could be to build regular passive income, or it could be to profit through capital gains, or both.
Here are 7 of the primary mortgage note investing strategies used by investors:
- Flipping notes to other investors (wholesale to retail)
- Rehabbing notes and reselling to other investors (value add)
- Purchasing notes to own and/or sell the real estate
- Originating seller financed notes for income or resale
- Rehabbing notes and keeping them for income
- Buying performing notes for income
- Making private money loans to RE investors
Most note investors will use more than one of these strategies depending on the dynamics of the specific note they are looking to buy. In some cases it may be most appropriate to flip or resell a note. Other times it may be better to keep it for the income. A lot of that will depends on your own goals.
It is also possible to sell some of the future income from a note (a partial) and keep the rest. You can also possible to borrow against notes, just like physical real estate. So there are lots of strategies to consider, and some will be more relevant than others with each individual note.
While income seekers will be best positioned to buy mortgage notes that fit strategies 4 through 7, other investors can take a more holistic approach.
Mortgage Notes for Sale Online
The first port of call for most investors new to the note investing game is to search for mortgage notes for sale online. While there are plenty of places you can buy notes online, it is important to remember that you will be paying retail prices for these notes. If you want to buy notes at wholesale prices, you need to buy direct from banks and other lenders.
Garnaco Private Lending Portal
I would be remiss if I did not mention first our own investor portal. We fund new acquisitions for our affordable housing program in partnership with private lenders who buy a mortgage note attached to one of our houses. All of our notes are performing, we are the borrower, and lenders can can view all of the notes we currently have available in the portal.
You can also join our priority investor email list. We send out details of new lending opportunities and performing notes for sale every Thursday. It’s a great way to stay in touch with the latest deals, and see what type of notes other investors are buying.
Paperstac has taken the note trading business to the next level. The platform bills itself as the first fully digitized mortgage note transaction engine, and they’re not wrong.
Anyone can buy and sell mortgage notes on Paperstac. They have digitized the entire process, from listing notes for sale, through negotiations, contracts, notary and shipment. Listing a mortgage note for sale on Paperstac is free, and they charge a nominal fee of 1% for successful sales.
The platform has a great dashboard and checklist to help guide your through their proven note buying process. This is a great option for anyone looking to buy their first note because the platform essentially holds your hand right the way through your purchase, making sure you don’t miss any of the important little details.
Notes Direct is another platform that allows you to buy and sell mortgage notes and real estate online. You will find all sorts of notes to buy here, including performing loans, non performing loans, and physical real estate.
Loan MLS is a note trading platform that boasts a membership of over 20,000 qualified note investors and mortgage note buyers, making it a great place buy and sell notes. As well as listing notes for sale, they have a wanted ads section where you can post details of the kind of notes you are looking to buy. This is a useful feature because you can be very specific about your note buying criteria.
There is also the option to work with loan originators to fund new loans, which is a great option if passive income is your goal. Loan MLS does not charge any fees or commissions, making it a cost effective way to buy notes. You can also network with hard money lenders via this site, opening the doors to more note investing opportunities.
Watermark Exchange operates a mortgage note trading desks where larger institutional investors and banks can list their notes for sale to retail note investors. According to it’s website Watermark expects to have over 8,000 note listed for sale in 2020.
Watermark offer a great search feature that shows notes for sale geographically. You can search and find a unique map of notes and real estate in your target area. You can also use Watermark’s own due diligence process and investment forecast for each note. They also operate a Buyers Club where you can buy off-market mortgage.
Note Trader Exchange
Note Trader Exchange is an online platform that matches note seller with buyers. For buyers they list notes for sale from banks, institutions, and private investors. NTE offers sellers a number of options when listing their mortgage notes for sale on the site, including Buy it Now, Place a Bid or Make and Offer.
CREXi is an online marketplace and MLS that lists commercial real estate. This includes mortgage notes secured against commercial property assets such as multifamily buildings, retail and industrial.
To find notes to buy on CREXI, you can navigate to the the ‘for sale’ section, and filter listing by type ‘note’. Commercial properties tend to be larger, and so the real estate notes for sale on CREXi are inevitably quite large also.
Note Investing Crowdfunding Websites
If you want the income from mortgage notes, but do not necessarily want to commit to the steep learning curve, time, effort and resources it takes to buy individual mortgage notes, you can instead look to one of many crowdfunding platforms that offer notes for sale.
The Title III of the JOBS Act – the Crowdfund Act – was finally adopted by the SEC in October, 2015. This new law allowed companies to use crowdfunding to issue securities, something that was not previously permitted.
Crowdfunding is especially prevalent in the real estate industry. There are a number of fairly well-established crowdfunding website offering small partial investments in single family homes, multifamily properties, industrial real estate and real estate debt.
Reserved for accredited investors, Peer Street connects buyers with notes from some of the country’s leading loan originators. This platform is ideal if you are looking for a hands-0ff, passive way to invest in notes. There are number of different product offering on Peer Street, and you can use the done-for-you service to build a portfolio of notes to spread your risk across multiple loans.
Despite being reserved for accredited investors only, if you do qualify as such you can invest in a mortgage note with as little as $1.00. Returns are not as good as other methods of investing in notes at roughly 6% to 9% p.a., but Peer Street are well established and have a proven track record of returning over $175 million in interest to its investors.
Patch of Land
Patch of land is another crowdfunding website that allows you to invest in real estate debt alongside other investors. Like Peer Street, this is not like buying an individual note. The team at Patch of Land source the deals, do the due diligence, then post them online for investors to fund.
One great thing about Patch of Land is the fact that they sometimes invest their own money in the deals they promote. You can invest with as little as $5,000, and earn returns up to 12% p.a. The projects on this platform tend to be between 30 days and 36 months.
Fundrise is another crowdfunding option that allows you to invest in real estate notes alongside other experienced investors. This is another done-for-you service that suits passive investors who do not want to spend the time effort and resources to buy mortgage notes direct from sellers or lenders.
There are a number of investment options to choose from at Fundrise, and you can start with an investment of just $500. One of the best features of this platform is the fact that every investment is regulated by the Securities and Exchange Commission (SEC).
While Lending Home do sell whole mortgage notes to institutional investors, if you are an individual (accredited) investor you can buy ‘platform notes’. Lending Home are a direct lender, meaning they loan out their own capital. They then sell the notes on their online platform.
The minimum investment with Lending Home is $50,000, but you can invest as little as $5,000 in individual loans. that means that even the minimum investment amount allows you to build a portfolio of up to 10 notes. Every investment is for a minimum of 12 months and they have an AutoInvest feature that will reinvest your monthly interest check in new loans.
Note Brokers and Funds
We have already covered a bunch of online note investing platforms, and some of the best note crowdfunding website. Now, let’s talk about brokers and funds.
Note brokers typically buy mortgage notes wholesale from banks and other large investors, some of these notes they will keep, others they will offer for sale. You will find that brokers offer a range of notes for sale to the general public, including re-performing notes they have worked out, to straight up flipping the trash notes they do not want or have not been able to work out themselves.
Note funds (often also brokers) are collective investments that offer shares, units or memberships in a fund. The fund will use investor capital to will buy mortgage notes, and the fund manager will then work out those loans to the most appropriate exit strategy (or hold). Often these funds offer a fixed return to their investors, with excess profits going to the fund manager.
Paper Assets Capital
Paper Assets Capital is a note broker that runs a trade desk and a note fund. You can buy individual real estate notes direct from their trade desk, or units in their note fund. Anyone can buy an individual mortgage note, but fund investments are reserved for accredited investors.
The Paper Assets Capital note fund (PAC FUND IV, LLC) offers unit holders a fixed return of between 8% and 12% p.a. depending on how much you invest. The term of an investment in the fund is 36 months.
I would imagine that many (if not all) of the individual mortgage notes for sale through the trade desk will be notes that the fund are selling. Effectively using the trade desk to liquidate fund profits to reinvest.
Fusion Notes is a Colorado-based note investor that offers mortgage notes for sale, as well as the opportunity to invest in their mortgage note fund. Fusion also provide training and education for note investors.
Equity First Funding
Equity First Funding are a real estate and note investment company. They buy and sell notes on their own account, and also buy real estate and sell with seller financing and then sell those notes.
The Equity First website has a listing portal where they display all of their mortgage notes currently for sale. This includes filters for performing notes, non performing notes and sub performing notes.
Noteworthy Investments is a buyer and seller of mortgage notes based out of Cape Canaveral, Florida. There is not a great deal of information available on their website about the types of mortgage notes they have for sale. It is assumed that they will operate in a similar fashion to other investors on this list.
Noteology describe themselves as a full service mortgage note investing company. They buy, sell and trade mortgage notes. According to their website, they buy and sell performing and non performing mortgage notes, as well as physical real estate.
If you want to buy mortgage notes from NoteOlogy, you can register as a note buyer on their website. They will add you to their investor list and send new notes for sale by email
The Note Factory
According to their website, The Note Factory “creates a continuous stream of high yielding notes each month”. They do this by buying real estate and selling it with seller financing – they then allow investors to buy the mortgage notes they create.
Judging by the testimonials on their website, mortgage notes available for sale through The Note Factory generate investment returns of around 10% p.a.
Edward J Adams Note Brokerage
Edward J Adams is a long-standing family business that buys and brokers all sorts of mortgage notes. They will provide a quote for your note if you are selling, and if you are looking to buy mortgage notes you can register with them via their website
According to its website, this brokerage firm deals is all sorts of debt instruments, including Mortgages, Land Contracts, Deeds of Trust, Lotteries and Annuities. There are no mortgage notes listed for sale online, so you will have to contact them for a current inventory.
Located in Seattle, WA. Evergreen Note work with home owners, builders, developers, and other real estate professionals to create seller-financed notes that they make available for sale to investors. They also buy and broker mortgage notes.
Evergreen buy and rehab their own real estate to create seller financed note, and they also buy and sell both performing and non performing notes.
PPR Note Co
We cannot run a list of places to buy mortgage notes without giving an honorable mention to Dave Van Horn’s PPR Note Co. Dave has been a trailblazer in note investing education, and is one of the most well-known note investors in America. He is also a published Author with a best selling book on Amazon.
PPR used to sell non performing notes via an online platform. Now now they have multiple note investment fund offerings for accredited investors that pay fixed returns. PPR provide their investors with useful regular updates on their portfolio of notes.
If you do not want to buy notes alongside other investors via crowdfunding, but you do want passive income without spending too much time and effort learning the note investing business, then private lending is one of your best options.
Real estate investors use private money loans to buy and rehab properties. Private money (or hard money as it is sometimes known) allows the RE investor to close quickly with cash, whereas traditional bank financing can be hard to obtain for some properties and often takes way to long to close.
For the lender, they get to originate their own loan, set their own lending terms, and get to know all about their borrower and the collateral in advance of lending. The fact that your borrower is a real estate investor and not an owner occupier has a number of distinct advantages over buying performing notes.
Here are a few options that will allow you to see private lending opportunities online.
Garnaco Private Lending Portal
As I mentioned right at the beginning of this article, I work with private lenders every day. These guys buy notes secured against our own real estate assets, and every investment is designed to create a home ownership opportunity for low and middle income families.
You can view all of our latest lending opportunities in our Private Lending Portal, or you can join our Priority Investor List, where we send out new investment opportunities to our community of over 5,000 self-directed investors every Thursday.
Connected Investors does what it says on the tin. It matches borrowers – typically real estate investors – with private lenders and note investors. I have used Connected investors personally to connect with private lenders, and the system works pretty well.
They have a huge list of lenders willing to fund all sorts of real estate deals, including fix & flips and long term rental properties. If you are looking to connect with potential borrowers, this is a good place to start.
Buying Mortgage Notes From Banks
So far we have covered online note exchange and listing platforms, crowdfunding websites, note brokers, funds and private lending. But if you want to access the really big returns from note investing, you need to buy non performing notes direct from the bank.
Now, this is by far the most financially rewarding way to buy notes (wholesale), but it is also the hardest. It requires a lot of time, effort and resources to buy mortgage notes from banks. If it were easy, everyone would be doing it!
Buying real estate notes from banks is a people business. No banks list their non performing notes for sale online, so you have to find the right person to speak to at the bank and build a real human relationship with the seller. Relationships are absolutely fundamental to your success or failure when trying to buy mortgage notes from any bank.
All that said, there are some useful tool that will help you identify banks that have non performing notes. BankProspector is a great online tool that identifies lenders with non-performing notes and REO. It also gives you decision maker contact information and other key data to help you identify good note buying opportunities. When I last looked, they had 5,082 banks, 5,275 credit unions and over 39,000 contacts in their database. Once you’ve identified a tape of notes for sale, it’s up to you to pick up the phone!
How to Get Started
So there you have it. If you’re hoping to buy mortgage notes, this list gives you plenty of options. As I alluded to earlier on, probably the best starting point for most investors is to figure out what your personals goals and objectives are, and how much time, effort and resource you’re prepared to commit.
If it’s hands-off passive income you want, then you can buy performing notes or do some private lending. If you really want to get your hands dirty, then start building relationships with banks and buy non performing loans to sell or keep long term.
I hope you’ve found the information contained here useful, and I wish you all the very best on your mortgage note buying journey!
Some More Note Investing Articles:
- Where to Buy Mortgage Notes – A Complete List of Verified Sources
- Note Investing 101 – Everything you Need to Know About Note Investing
- What is a Note and What Terms Should it Contain?
- Performing vs Non Performing Notes – Which is the Better Investment?
- The Private Lender’s Guide to Assessing Credit Risk
- Understanding Lien Position and Priority
- How to Buy Mortgage Notes Online in 2021
- How to Assess Real Estate for note Investing and Private Lending
- Find Performing Notes for Sale in 2021
- Private Lending 101 – Everything you Need to Know About Private Money Lending
- Is Buying Mortgage Notes a Good Investment in 2021?
- Real Estate Notes – Everything You Need to Know