Show me the math! Is this worthwhile as a side hustle?

[Noel R.]

Been doing a ton of research but haven't really found anything with hard numbers. Why is Note investing the jam? Give me some math to work with. Sh&t link me to some math/note articles. Is note investing worthwhile for someone looking to pick up some cash on the side? I love my job and the best part is I have 20 hours to put towards making some bread on the side. Is note investing a better option than finding some solid investment properties?

[Tracy Z. Rewey]

@Noel R. There are all sorts of ways to make money with notes but the main strategies are:
1. Note Referrals - Find and refer notes to investors and make a fee (usually 3-6% of the amount invested). I look at this as income rather than investing.

2. Note Investing - Invest in notes as a passive investor (8-12% average returns) 

3. Note Rehabbing - Buy notes and work to enhance the return (incentivize early payoff, take non-performing to re-performing, cure paperwork deficiencies, hardest hit funds, etc) for higher returns.
4. Create Your Own Note - Combine real estate investing with seller financed notes.
5. Buy Full and Sell Partial - Keep some or all of the payments on the back-end for future cash flow. Here is one of my favorites (with lots of numbers).

We were approached with a well-seasoned note secured by five retail strip mall type commercial units. The units had been purchased by a religious organization to use as meeting facilities. The particulars looked like this:
• Sale Price: $135,000
• Down Payment: $10,000
• Original Balance: $125,000
• Terms: 10% interest payable in 360 payments of $1,096.96 per month
• Remaining Balance: $121,248.52
• Remaining Term: 306 months

We negotiated to pay $92,804 for the full purchase of the remaining 306 monthly payments. We took a full assignment and purchased the entire note payment stream from the seller.

We then negotiated to sell a partial of 186 monthly payments for a purchase price of $95,046. We realized an immediate profit of $2,242 on the sale of the note AND retained the right to receive 120 monthly payments of $1,096.96 each commencing in 15 ½ years.
To recap:
• Payments bought: 306
• Payments sold: 186
• Payments retained: 120

Money was made at closing but even better, we retained the rights to a future residual income stream totaling over $130,000 ($1,096 x 120).

Fast forward 12 years and the note paid off early. Instead of getting the monthly payment we received a surprise payoff check of $57,569.28.