Hello Reader,

Nobody told me this when I started.

The real money when buying notes isn't in the interest rate. It's in what you pay.

This week, I'm showing you how discounts work and a real deal I closed using this strategy.

Notes Concept🧠

A note discount is when you buy a note for less than what the borrower still owes.

Think of it like this.

A borrower owes $25,000. But you don't pay $25,000 for that note. You pay $22,000.

That $3,000 gap between what you paid and what they owe is your discount. That creates your return.

Not all discounts are equal, though.

On a performing note, the borrower is paying on time, so the risk is lower. Smaller discount, steadier yield.

On a non-performing note, payments have stopped. The discount goes deeper, not just to chase a higher return, but to account for the work and uncertainty it takes to resolve it.

The discount is always tied to risk. More uncertainty in the asset means you need more protection built into the price.

Here's what I love about performing notes.

Nothing changes for the borrower. Same payment. Same interest rate. Same loan.

They just get a letter with a new address to send their check to.

And because you paid less than face value, that same monthly payment now generates a higher yield!

Real World Experience💰

Let me show you exactly how this played out in a real deal.

A borrower owed $25,000 on a note. I pulled up my financial calculator and plugged in the terms.

Remaining balance, interest rate, monthly payment, time left on the loan.

Then I asked one question: what do I need to pay to walk away with a 12% return?

The calculator said $22,000.

I made the offer, and the seller accepted without hesitation. Why wouldn't they? They had already collected their down payment and years of monthly income. They were ready to move on to the next deal.

That $3,000 difference between what I paid and what the borrower owed is exactly what turned their original interest rate into a 12% yield for me.

But the discount isn't just about yield. It's about protection.

Buying below the balance gives me options if a borrower hits a rough patch. Modification, other resolutions, or foreclosure. I'm not scrambling to recover every dollar because I didn't overpay on the front end.

That cushion is what keeps my investors and me in a stronger position, no matter how the note resolves.

I wasn't negotiating against anyone. I was just making sure the price matched the return and the risk.

And if the seller won't budge? That's fine. Not every note needs to be your deal.

​

Mindset Shift 🔄

Everyone has a 401k. Your employer offers it, financial advisors recommend it, and it feels like the responsible thing to do.

But have you ever actually looked at what it can and can't do for you?

Here's how it compares vs notes:

401k

• Funds are frozen until you're 59½ (touch it early and pay penalties)
• Returns depend entirely on the market
• You can't use it to generate income today

Notes

• You decide how long your capital is committed (short-term or long-term)
• Returns are predictable and backed by real estate
• Generates income today, not in 30 years

That doesn't mean a 401k is bad. Free employer matching is free money; always take it!

But a 401k is a retirement plan. Notes are a now plan.

Here's what most people don't know. You can actually use retirement funds to invest in notes through a self-directed IRA or Solo 401k. Same tax advantages you already have, but now your money is backed by real estate instead of the market.

So if you have an old 401k sitting with a former employer, or an IRA you rarely think about, that money doesn't have to stay tied to Wall Street.

Reply to this email, and I'll show you how it works.

To your success,

Sierra Davis

P.S. If you're tired of waiting until 59½ to access your own money, I partnered with a financial education company that can help you figure out your actual freedom day and build a real plan to get there. Not someday. A specific date. Book a free strategy session here: Meet with a Wealth Coach​

This is for educational and informational purposes only. Nothing contained here constitutes financial, legal, investment, or tax advice. All investing involves risk, including the possible loss of principal. Individual results will vary. Please consult a licensed financial advisor, attorney, or tax professional before making any investment decisions. Some links in this email may be affiliate links. If you sign up through my link, I may receive a commission at no additional cost to you.