Discounted paper is a very powerful investment tool that all serious real estate investors should master. It's a way to buy and leverage property with very little money or equity. With the note you can keep it and make a profit over time or sell at a discount for other opportunities. Interest and yield are not the same. Interest is a percentage lenders charge for the use of their money.
Yield is the amount of the profit divided by the amount of money invested.
Yield is also called return on investment. Difference between interest and yield. The formula for calculating yield is the amount of profit divided by the amount invested. To compute, add up the profit the buyer will earn. Then divide the amount of profit by the cost of the note.