Last Updated on February 8, 2026 by T.J. Fitzgerald
Since 1996, I’ve navigated the note investing world, and one strategy consistently stands out for beginners and pros: buying partial notes. It’s a lesser-known approach that lets you enter note investing with less cash and lower risk. Here’s how it works, based on nearly 30 years of experience.
A partial note is buying a portion of a seller-financed loan’s payment stream. Instead of purchasing a $50,000 note outright, you might buy the next 36 payments for $10,000. The seller gets cash now, you get steady returns, and they keep the note’s remaining payments. In 2025, with seller financing booming due to 5-6% interest rates, partials are a smart play for note investing for beginners.
Step 1: Source Performing Notes
Focus on seller-financed notes—loans where a property seller finances the buyer. Avoid bank notes; they’re too complex for starters. Buy note holder lists from trusted providers for a few hundred dollars. These lists include loan details like balance and property type. In 1998, I mailed 300 letters from a list and landed a $60,000 note, buying 48 payments for $15,000. Direct mail beats online platforms, which often have outdated data. Results vary.
Step 2: Structure the Deal
Work with a professional funder to handle due diligence—liens, title checks, compliance. For a $50,000 note at 7% interest, offer $10,000 for 36 payments, aiming for a 10-12% yield. Use a financial calculator to confirm the numbers. In 2001, I bought a 60-payment partial for $18,000, yielding 11%. The funder managed the paperwork, and I got monthly checks. Deals take effort, but funders simplify the process.
Step 3: Build a Referral Network
Connect with attorneys, accountants, and financial planners who know note holders. In 1997, I sent flyers to Chicago CPAs and scored a $40,000 partial note deal. Local networking builds trust and steady deal flow. Say, “I can help your clients sell part of their notes for cash.” Check local rules to stay compliant. Partials reduce risk. You’re only exposed to the payments you buy, and funders handle defaults. They’re a stepping stone to buying full notes. In 1999, partial profits helped me buy a $25,000 note I flipped for $35,000.
Ready to start? My mini-course covers sourcing, structuring, and scaling partial note deals. It’s packed with lessons from my 30-year career. Results vary, so always do your due diligence. Subscribe for weekly tips, and let’s make 2025 your year in note investing. Fill out the opt-in form in the right-hand column to join.
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