Fred Moskowitz shares how the volatility of the tech industry led him to seek alternative income streams and ultimately discover mortgage note investing. Instead of owning properties and dealing with tenants, Fred focuses on owning the debt—collecting payments as the lender rather than the borrower.
Together, Derek and Fred walk through the fundamentals of note investing, including buying performing notes, using partials to deploy smaller amounts of capital, understanding foreclosure timelines, evaluating borrower risk, and navigating state-specific laws. They also discuss taxation realities and why self-directed IRAs and Roth IRAs can be powerful vehicles for note investors.
This episode demystifies note investing and shows how it can fit into both active and passive investment strategies.
Note investing means owning the debt, not the property — you become the bank.
Performing notes offer steady, lower-risk cash flow compared to distressed notes.
Non-performing notes and workouts offer higher returns but require more time and expertise.
Partials allow investors to start with less capital and increase velocity of money.
Notes are purchased at a discount, increasing yield beyond the borrower's interest rate.
State foreclosure laws matter — timelines and costs impact pricing and risk.
Equity position, borrower history, and location drive note value.
Institutional notes offer consistency and cleaner documentation.
Note investing creates taxable income, unlike rental depreciation strategies.
Self-directed IRAs and Roth IRAs can dramatically improve returns when used properly.
Time availability determines strategy — passive funds vs active note portfolios.
What note investing is and how it works
Becoming the bank vs owning real estate
Performing vs non-performing notes
Partial note investing explained
Pricing notes and risk factors
Borrower behavior and loan performance
Foreclosure laws and state-by-state differences
Institutional vs private seller-financed notes
Yield expectations and cost of capital
Taxation of notes vs rental properties
Using self-directed IRAs and Roth IRAs
Passive vs active note investing strategies
Listen to this episode if you:
Want passive cash flow without tenants or toilets
Are curious about owning notes instead of properties
Want to diversify beyond traditional real estate
Have retirement funds sitting idle
Want predictable income streams
Are exploring lower-volatility investment options
Want to understand risk before buying notes
Are deciding between active or passive investing
Want a beginner-friendly breakdown of note investing
This episode is ideal for real estate investors, lenders, retirement-account holders, and anyone looking to add stable income to their portfolio.
00:00 – 03:15 | Introduction & Fred's background
03:16 – 07:40 | Why note investing exists & becoming the bank
07:41 – 12:30 | Performing vs non-performing notes
12:31 – 16:50 | Partial notes & yield examples
16:51 – 21:30 | Pricing notes & risk factors
21:31 – 25:40 | Foreclosure laws & legal considerations
25:41 – 29:45 | Taxes, IRAs, and Roth strategies
29:46 – 32:30 | Passive vs active note investing
32:31 – 34:00 | Getting started & final advice
#NoteInvesting #GenerationsOfWealth #PassiveIncome #BeTheBank #MortgageNotes #RealEstateInvesting #AlternativeInvestments #CashFlow #RothIRAInvesting #SelfDirectedIRA
#FredMoskowitz #DerekDombeck
