Episode Details

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 cap