How to Get Started with Note Investing in 2025 (Even with $5,000 or Less)
Are you looking for a way to earn passive income from real estate without becoming a landlord or buying physical property?
Note investing might be your answer.
Mortgage note investing is gaining traction in 2025 as an affordable and lower-hassle alternative to traditional real estate. Best of all, you don’t need a six-figure bank account to get started. Many investors begin with as little as $5,000.
In this guide, we’ll show you how to take your first steps into the world of note investing—safely and strategically.
What Is Note Investing?
At its core, note investing means buying the debt attached to a real estate property, rather than the property itself.
When someone takes out a mortgage, the lender owns a promissory note, a legal document outlining the loan terms and repayment schedule. Investors like you can purchase these notes at a discount and start collecting the monthly payments (just like the bank).
There are two types of notes you’ll come across:
Performing Notes: The borrower is current on payments.
Non-Performing Notes: The borrower has fallen behind or stopped paying.
Both types can be profitable, but beginners often start by taking notes for a more predictable income.
Can You Start with $5,000?
Absolutely. While large institutional investors may buy bulk portfolios, there’s a growing secondary market for smaller investors. In fact, many note sellers offer:
Fractional note opportunities
Partial purchases of long-term notes
Smaller-performing notes in stable markets
At Note Investor University, many of our students start with $5,000–$10,000 and grow their portfolios from there.
Step-by-Step: How to Get Started in 2025
1. Learn the Basics
Before investing a dollar, understand how notes work. Learn key terms like:
Loan-to-Value (LTV)
Yield/Return
Collateral
Default risk
Foreclosure timelines
[Pro Tip: Watch our free on-demand webinar to learn the fundamentals in less than 30 minutes.]
2. Build a Deal Checklist
Every deal should follow a simple due diligence process. For example:
Who is the borrower?
What’s the property value?
Is the payment history solid?
What’s the risk if payments stop?
Having a repeatable checklist helps avoid emotional decisions.
3. Find Reputable Note Sellers
You can buy notes from:
Direct sellers (usually experienced note holders)
Note platforms and exchanges
Banks and hedge funds (often for larger packages)
Make sure the seller provides a detailed loan file and allows you time to review the documentation.
4. Use a Self-Directed IRA (Optional)
Want to invest with retirement funds? You can use a self-directed IRA to buy notes, letting your earnings grow tax-deferred or even tax-free.
5. Start Small and Scale Strategically
Begin with one or two deals and track their performance. Reinvest profits. Many investors scale to five, ten, or even twenty notes over time without needing more capital out of pocket.
Why 2025 Is the Best Time to Start
With rising interest rates and tighter lending, banks are offloading more distressed notes and creating more opportunities for everyday investors. Plus, more education and support is available today than ever before.
Platforms like Note Investor University exist to empower beginners, without the pressure or high-ticket sales tactics common in the industry.
Final Thoughts
Note investing isn’t a get-rich-quick scheme—but it can be a powerful path to passive income, long-term wealth, and financial freedom.
If you’re tired of landlord headaches and looking for a smarter entry point into real estate, this could be the move you’ve been waiting for.
Ready to Take the First Step?
Watch our free training and learn how real investors are earning a monthly income from mortgage notes, without owning property.
