This video course on note investing comes in seven parts. It is for anyone starting out with notes.
This page brings together a seven-part video course on note investing and the Note Investing Basics playlist, an introductory set of videos for people new to notes.
How to use this course
Watch the seven parts in order, one at a time, and write down any terms or questions that come up. Before moving to the next part, look those up in the written lessons below.
- Note Dictionary: definitions of the terms used in the note business.
- Note Brokering FAQ: answers to common questions from people starting out.
- 12 Myths of Real Estate Note Investing: common misconceptions to clear up early.
- Note calculator: work through any payment or yield figures yourself.
When you finish the seven parts, watch the Note Investing Basics playlist at the end of this page.
After the videos, a written primer covers the core ideas every new note investor needs, so you can read the basics on this page even before you press play.
Part 1
This is part 1 of the seven-part note investing video course.
Part 2
This is part 2 of the seven-part note investing video course.
Part 3
This is part 3 of the seven-part note investing video course.
Part 4
This is part 4 of the seven-part note investing video course.
Part 5
This is part 5 of the seven-part note investing video course.
Part 6
This is part 6 of the seven-part note investing video course.
Part 7
This is part 7 of the seven-part note investing video course.
The note investing basics playlist
A playlist of introductory videos on note investing.
Note investing basics in plain English
A real estate note is a written promise to repay a loan, usually secured by property through a mortgage or deed of trust. The person who owes the money is the payor. The person who receives the payments is the note holder.
Notes are created when a bank, a private lender or a property seller lends money. Many note holders later decide they would rather have a lump sum now than payments over years. Note investors buy those notes, and note brokers bring sellers and investors together for a fee.
Worked example: how a note buyer earns a yield
Here is an illustrative example. A note has 120 monthly payments of $500 left, at a 6% note rate. The remaining balance is about $45,000. An investor doesn’t pay the full balance. Instead, the investor decides on the yield (the return on the money invested) and pays the price that produces it.
| Investor’s target yield | Price for 120 payments of $500 | Discount from balance |
|---|---|---|
| 6% (the note rate) | About $45,037 | None |
| 10% | About $37,836 | About $7,201 |
| 12% | About $34,850 | About $10,186 |
The higher the yield the investor wants, the less they pay. That price is what the note holder receives in cash today. You can reproduce these figures with the note calculator, and see one note’s full life in how mortgage notes work.
Terms to know before you watch
- Performing note: the payor is paying as agreed.
- Non-performing note: payments have stopped or fallen well behind.
- First lien and second lien: which loan gets paid first if the property is sold or foreclosed.
- Balloon: a large lump sum due at the end of a note’s term.
- Partial purchase: buying only some of a note’s payments instead of all of them.
- Due diligence: checking the payor, the property and the paperwork before you buy.
A sensible order for learning notes
- Learn what a note is and how it’s created, including seller financing.
- Get comfortable with the math: payments, yield and present value.
- Learn how investors judge a note and the property behind it.
- Study how deals are priced, negotiated and closed.
- Only then branch into specialties such as non-performing notes or niche cash flows.
Note investing is a real business built one deal at a time. Take each step slowly, run the numbers on every example, and ask a qualified professional when legal or tax questions come up.
