What Are Performing Land Notes?

A land note is a mortgage. Instead of the bank holding the mortgage, an individual or entity (investor) holds the mortgage and receives monthly payments.

The borrower pays monthly principal and interest payments to the note holder, usually amortized over 25 or 30 years.

The note holder has a first lien position on the land. In the event of default, the note holder can sell the land. Note holders are often protected by a large equity cushion, the difference between what they buy the note for, and the value of the property. By buying notes at a discount to the loan balance, the note holder (investor) creates additional equity upfront.

Why We Like Performing Land Notes

• Strong Returns.
• Low leverage.
• Monthly payments.
• Hands off, no management.
• Collateral that improves in value over time.
• Collateral is resilient, difficult to damage.
• Loan balance decreases over time, steadily decreasing leverage.
• Third party note servicer handles payments, late fees, and provides a dashboard for borrower and investor. There is no cost to the investor for this service.