Many people think you need a lot of money to start investing in real estate notes. Some believe you need over $100,000! But that’s not always true. You can start with much less. Let’s look at how much you really need and ways to get started even if you don’t have a lot of money.

The General Rule with Real Estate Notes

To get started in note investing at a meaningful level, you’ll typically need between $25,000 and $50,000. This range usually provides enough capital to purchase a solid note and cover any associated costs that may come up during the process.

Ways to Start with Less Money

If you’re not ready to commit $25,000–$50,000 upfront, don’t worry — there are still options. You can begin by exploring smaller strategies, such as brokering notes, buying partials, or investing in second liens, which require less capital but still allow you to gain experience and build momentum in the note space.

 

If you don’t have $25,000 to $50,000, here are some options:

• Brokering Notes: You can act as a go-between for people buying and selling notes. You find notes for buyers and earn a fee for your service. This doesn’t require you to use your own money to buy notes.
• Second Liens: These are like second mortgages. They are riskier than first mortgages, but they cost less. If someone defaults, the first mortgage gets paid first. But you can often buy defaulted second liens for much less.
• HELOC: If you own a home, you might have a Home Equity Line of Credit (HELOC). You can use this to buy notes. Since HELOCs are tied to your home, the interest rates may be lower than other loans.

• Note Partials – Instead of buying the full note, you purchase just a portion of the payments. This strategy reduces the upfront cost and risk while still letting you earn cash flow.

How Much Do You Need? — Capital Ladder

Typical entry points and what fits each budget. (Examples only, not guarantees.)

$0–$2K

 

Brokering Notes
Match buyers & sellers · Earn fees · Minimal capital

$5K–$10K

 

Defaulted Second Liens
Lower entry cost · Higher risk vs. firsts

$10K–$25K

 

Seconds / Partials / HELOC-Funded
Mix of seconds or partials; use HELOC as a funding source

$25K–$50K

 

Typical Starting Range
Better inventory access · Room for legal/servicing costs

$50K+

 

Diversified Positions / 1st Liens
Broader selection · More diversification potential

Buying Real Estate Notes for Less

 

Second liens can be a good way to start with less money. Because they are behind the first mortgage, they are cheaper to buy.

For example, you might buy a defaulted second lien for $5,000 to $10,000. This is much less than what you would need for a first mortgage.

One investor even bought a mortgage note for just $100! While this is not typical, it shows that deals are out there if you look hard enough.

Ways to Start with Less Capital

 

Path

Typical Capital

Hands-On

Risk

Notes

Brokering Notes

$0–$2K

Medium

Low

Find sellers/buyers, earn a fee; great learning path without owning notes.

Second Liens (Defaulted)

$5K–$10K+

High

High

Cheaper to acquire but junior position to the first; model exits conservatively.

Use a HELOC

Varies (secured)

Medium

Medium

Lower rates vs. unsecured loans; remember your home secures the HELOC.

$25K–$50K “Starter”

$25K–$50K

Medium

Medium

Access to better inventory, cushion for legal/servicer/BPO/recording costs.

 

Why $25K is a Good Starting Point for Real Estate Notes

While you can start with less, $25,000 gives you more options. You can buy better notes and have money for any problems.

With $25,000, you can:

• Buy notes with higher returns.
• Handle unexpected costs like legal fees.
• Diversify your investments.

 

What Kind of Returns Can You Expect?

The returns on note investing can vary. It depends on how much work you want to do. If you want to be very hands-off, you might get lower returns. If you are willing to manage the notes more closely, you could get higher returns.

Factors that affect returns:

• Type of Note: First mortgages are usually safer but have lower returns. Second liens are riskier but can have higher returns.
• Property Condition: Notes on well-kept properties are less risky. Notes on properties that need work can be riskier.
• Borrower History: Borrowers with good credit are less likely to default. Borrowers with bad credit are riskier.

 

Is Note Investing Right for You?

Note investing can be a good way to earn money. But it’s not for everyone. Before you start, think about:

• Your Risk Tolerance: Are you comfortable with the risk of losing money?
• Your Time Commitment: How much time do you have to manage your investments?
• Your Financial Goals: What are you hoping to achieve with note investing?

How Involved Do You Want to Be?

Generally, more involvement can target higher returns; hands-off often targets steadier, lower ranges.

Hands-Off Approaches (e.g., performing notes, partials, funds)

 

Lower involvement · Lower variance

Active Approaches (e.g., buying & working out non-performing, seconds)

 

Higher involvement · Broader outcome range

• Type of Note: Firsts = typically safer/lower return; Seconds = riskier/higher potential.
• Property Condition: Better condition generally lowers risk.
• Borrower History: Strong pay history/credit usually lowers risk.

Educational content only. Not financial advice. Outcomes vary; capital at risk; returns are not guaranteed.

About the Labrador Lending Note Investing Mentorship Program

Looking for a practical, personalized way to sharpen your note investing skills? The Note Investing Mentorship Program at Labrador Lending is designed with you in mind. Whether you’re just starting out or ready to scale your existing portfolio, this program provides one-on-one mentorship tailored to your specific goals and challenges.

Led by industry expert Jamie Bateman, this mentorship gives you direct access to a seasoned investor who has successfully navigated the note space for years. Jamie has operated two note funds, acquired notes in more than 25 states, and managed a wide variety of note types—including first and second liens, land contracts, and investor loans. He also founded and managed a loan servicing company. Since 2018, Jamie has focused exclusively on note investing, building on his real estate investment experience that dates back to 2010.

This isn’t generic coaching—it’s strategic guidance rooted in real-world experience.

What You’ll Get

• ✅ Personalized, one-on-one mentorship tailored to your investing journey
• ✅ Direct access to Jamie’s trusted network of note investing professionals
• ✅ Flexible, pay-as-you-go pricing—no large upfront commitments
• ✅ $150/hour sessions with a 3-session minimum

Visit our website to learn more. 

To get started fill out our brief form on this page:

Sign Up for Note Investing Mentorship