🧾 Summary

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.

⭐ Key Takeaways

• 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.

📚 Relevant Topics Discussed

• 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

🎧 Why Should You Listen?

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.

⏱️ Time Stamps

• 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

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