Last Updated on September 15, 2026 by T.J. Fitzgerald
This week’s tip is about the most common mistakes I see late starters make when they finally decide to chase passive income after years of feeling behind.
Mistake one: chasing yield without security. A 12% promise on an unsecured note or private loan sounds great until the borrower stops paying and you have no collateral. I’ve watched people lose principal that way more times than I care to count.
Mistake two: skipping due diligence. Payment history, current property value versus remaining balance, and borrower stability are not optional extras. One skipped step and a performing note turns into a problem asset.
Mistake three: treating every opportunity as set-it-and-forget-it. Notes still need occasional monitoring. The ones that work over the long term are the ones you actually review twice a year.
Mistake four: waiting for the perfect large deal. Plenty of solid $5,000 to $25,000 notes exist if you know where to look. Starting small beats waiting another three years for a mythical perfect note.
Mistake five: ignoring tax wrappers. Holding notes inside an IRA or Solo 401(k) can change the after-tax yield more than most people realize when they first run the numbers.
The practical fix is straightforward. Use existing lists of note sellers instead of cold-calling random owners. Check every deal with a time-value-of-money calculator. And talk with your own tax and legal advisors because every situation does play out differently.
If you want the actual lists we use to source these notes, they are at noteinvestors.com/leads. The broker-opportunity page at noteinvestors.com/broker-opportunity shows how some people start with zero of their own capital. The upcoming Note Investing Formulas program will walk through the exact calculations we use every week.
That’s the short version. Avoid the five mistakes, start with what you can verify, and keep the income layer secured.
IN THE “HOW TO TURN 90%..” PROGRAM, YOU WILL LEARN:
