You can make money buying real estate notes in a few different ways. The first way is to simply purchase the note from another party and then hold onto it until the borrower pays off the loan.
This can be a good strategy if you believe that the property will appreciate in value over time or if interest rates are low. Another way to make money with real estate notes is to act as a middleman between buyers and sellers.
In this case, you would find potential borrowers who are looking for financing and connect them with investors who are willing to provide the capital. You would then take a commission on each deal that you successfully facilitate.
Lastly, some people choose to invest in real estate notes by becoming what’s known as a “servicing company.” Servicing companies help manage loans for both lenders and borrowers after the sale has been completed.
This involves collecting monthly payments, handling customer service inquiries, and so forth.
If you have experience working in banking or mortgage lending, starting your own servicing company can be an excellent way to profit from real estate investing without having to put any of your own money into properties.