Buying Discounted Notes May 2026

You buy a note with a $100,000 balance for $70,000.

You collect interest on the full $100,000 balance, significantly increasing your effective yield.

Borrowers have stopped paying. These are bought at much steeper discounts, often with the goal of restructuring the loan or foreclosing to take the property. buying discounted notes

Buying discounted notes allows you to act as the "bank" by purchasing existing mortgage debt at a price below its face value. This strategy can provide high-yield passive income or a path to acquiring property through foreclosure. How It Works

AI responses may include mistakes. For financial advice, consult a professional. Learn more Should You Only Buy First Position Notes? - BiggerPockets You buy a note with a $100,000 balance for $70,000

When a lender (like a bank or private seller) wants to free up cash, they may sell their mortgage notes at a discount.

If the property value drops below your investment amount, your "security" is weakened. These are bought at much steeper discounts, often

You must verify the property's value, the title's clarity, and the borrower's payment history before buying.