Average ROI on Private Mortgage Notes (2025)
Private mortgage note investing has become an increasingly attractive option for investors seeking passive income, portfolio diversification, and above-market returns. In this stat page, we’ll break down key data, trends, and insights surrounding the average ROI on private mortgage notes in the U.S.
📈 Key Statistic
The average ROI on performing private mortgage notes in 2024 was 9.4%.
This figure is based on data compiled from note marketplaces, private investor surveys, and recent financial disclosures by private lenders. Non-performing notes—typically acquired at a discount—can yield returns from 12% to 25% after workout or foreclosure.
🔍 What Is ROI in Private Note Investing?
Return on Investment (ROI) in mortgage note investing is the annualized return generated from loan payments (principal + interest) based on the purchase price of the note.
For example:
If you buy a $100,000 note for $85,000 and receive $9,000 per year in interest payments, your ROI is 10.6% annually.
📊 Average ROI by Note Type
| Note Type | Average ROI (2024) |
|---|---|
| Performing Notes | 9.4% |
| Sub-Performing Notes | 11.8% |
| Non-Performing Notes | 17.2% |
| Partial Note Purchases | 12.1% |
Source: Private Lending Analytics, IncomeNoteExchange, NoteInvestor.com
🏘️ ROI by Property Type
Different property types impact the risk profile and return potential of mortgage notes:
| Property Type | Avg ROI (2024) |
| Single-Family Homes | 9.7% |
| Mobile Homes/Land | 11.5% |
| Small Multifamily | 10.2% |
| Commercial Property | 12.4% |
📍 ROI by U.S. Region
Returns can vary widely depending on the region:
| Region | Avg ROI |
| Midwest | 10.4% |
| Southeast | 11.1% |
| Southwest | 9.2% |
| West Coast | 8.5% |
| Northeast | 8.8% |
Investors report higher yields in less competitive, landlord-friendly states.
🧮 ROI Calculator (Simplified Formula)
ROI (%) = (Annual Cash Flow / Purchase Price of Note) x 100Example:
Purchase Price: $75,000
Annual Cash Flow: $7,875
ROI = (7,875 / 75,000) x 100 = 10.5%
🧠 Expert Insight
"Note investing offers one of the best risk-adjusted returns in private real estate finance, especially when buying seasoned notes at a discount."
— Brett Anderson, Managing Partner, We Buy Notes Lansing
📚 Related Stats & Trends
41% of private note investors target ROI between 8% and 12%
The most common note length is 15 to 30 years, with balloon clauses shortening payout timelines
Default rates on performing notes purchased from institutional sellers average under 3%
62% of note buyers use IRAs or SDIRAs to fund their investments tax-deferred
