Beyond the Hype: Jamie Bateman on the Pros, Cons, and Strategies of Mortgage Note Investing
Episode Details
Transcript
In this special episode, Jamie Bateman joins Chris Prefontaine on the Smart Real Estate Coach Podcast for a candid discussion on the upsides and challenges of mortgage note investing. They explore the realities of the asset class, touching on tax implications, risk factors, and how investors can navigate the space effectively.
Jamie also shares insights on his podcast’s evolving focus—offering more practical solutions for real estate investors in 2025. If you’re looking to expand your investment knowledge, this episode delivers honest and actionable advice.
Episode Highlights:- The Downsides of Mortgage Note Investing:
- Jamie breaks down a major drawback—unlike traditional real estate, mortgage note investing lacks built-in tax benefits, often resulting in taxation at the ordinary income rate.
- Risk vs. Reward:
- While note investing offers strong returns, it’s not a one-size-fits-all strategy. Jamie and Chris discuss who this investment model suits best.
- Labrador Lending & Educational Resources:
- Jamie highlights Labrador Lending as a resource for investors looking to get started and shares how From Adversity to Abundance is evolving to offer more practical advice in 2025.
For investors looking for a hands-off approach, Jamie shares insights into passive investment opportunities. Labrador Lending has solutions tailored for both accredited and non-accredited investors who want exposure to the mortgage note space without the need for active management.
He also emphasizes the power of partnerships and joint ventures in note investing, where experienced operators can leverage capital from passive investors to create mutually beneficial deals.
Additionally, Chris Prefontaine also joined Jamie Bateman on his show, From Adversity to Abundance, for an engaging conversation.You can listen to their full discussion on From Adversity to Abundance by clicking the link here.
Integrity Income Fund:
https://labradorlending.com/investors/passive-investors/
Labrador Mentorship:
labradorlending.com/investors/active-investors/
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Haven Financial Services:
Learn more: jamie.myfinancialhaven.com/
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Purchase Jamie’s Book: www.amazon.com/dp/B0CGTWJY1D?ref_=pe_3052080_397514860
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Website: www.adversity2abundance.com
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LinkedIn: https://www.linkedin.com/company/labrador-lending/?viewAsMember=true
Youtube: https://www.youtube.com/channel/UChYrpCUlqFYLy4HngRrmU9Q
Connect with Jamie
LinkedIn: www.linkedin.com/in/jamie-bateman-5359a811/
Twitter: twitter.com/batemanjames
Speaker 0
From adversity to abundance, hosted by entrepreneur and seasoned real estate investor, Jamie Bateman, is the ultimate guide for active and passive investors seeking clarity, mental fitness, and the confidence to make inspired decisions in the world of real estate. With a decade plus of investing experience across various niches and a background as a combat veteran, former army officer, and multimillion dollar mortgage note company owner, Jamie brings a wealth of knowledge and inspiring stories to each episode. Through weekly episodes featuring insightful interviews with industry leaders and solo explorations of mind set and strategy. Listeners will uncover actionable advice and tips to overcome challenges and build lasting financial success. Whether you're a seasoned investor or just starting, from adversity to abundance is your road map to turning obstacles into opportunities and achieving financial freedom. Speaker 1
Hey, Jamie. How are you, buddy? Speaker 2
Good. How are you doing, Chris? Speaker 1
Good. Good to see you. Happy New Year. Speaker 3
You too. Thank you. Speaker 1
Anything you wanna hit hit home on today from your exposure? Anything I need to ask Speaker 3
you? Nothing too. We so we have, the two main things that I'm focused on are we've got a solution for active note investors and also for passive note investors. Speaker 1
Active note, and passive note investors. How about where would the newbie fall listening going? Oh, that's interesting. I'd like to learn more about that. Speaker 3
Yeah. Labrador Lending dot com is the primary site. Also, my podcast that you were on would be great to mention if you don't mind. Speaker 1
I mentioned that in the opening already. I did the opening. Speaker 3
Okay. Speaker 1
Perfect. So I'll have you mention you might think of all this stuff. I'll have you mention any sites you want. It doesn't matter. Perfect. Because you don't have an affiliate or anything. Right? We just blast the people right to you? Speaker 3
Pretty much. Yeah. Okay. Yeah. No. That's good. I'm gonna zoom my camera out for sorry. I'm just zooming my camera out. I'm listening. Take your time. It might be a little better. Speaker 1
Yep. It's good. Okay. So we'll dive in. I'll just ask you to bring start bringing you up to date on where you what what you're doing this year for the new year and yeah. And then you can bring up the active and passive. Definitely told them to I said, write her downer for your show and to subscribe. Right? Hit him on that. I appreciate that. Speaker 3
Yeah. You bet. Okay. Speaker 1
Alright. Let's just give it a pause because it was recording anyway, and we'll go. Okay, Jamie. With that as a little background, welcome to the show, and good to see you again. Happy New Year. Speaker 3
I'm excited to be here, Chris. Thanks for having me. Speaker 1
Yeah. And as I said, I mentioned your show already, as I just said, but I also wanna make sure that they they, subscribe. So I'll say that fifteen more times before the show is out Speaker 3
and they can get Speaker 1
over there. Speaker 3
Share it with a friend as well. Yeah. Speaker 1
Yeah. Good to see you. Bring bring us up to date. I mean, I gave this short intro over. Bring us up to date on what's going on for twenty five with you. What are you working on right now? Just just give a ten thousand foot view, and then we'll peel back. Speaker 3
Yeah. I mean, with, I know you mentioned my podcast. I'm trying to really narrow that down the focus of the podcast so that we can better serve the listener and really help them kinda figure out which niche within real estate to head down and which path they may wanna head down, and that that may be, that may involve passive versus active. So we have solutions for both passive and active note investors. We can get into that later. One of the things that I'm focused on is kind of scaling what I'm already doing. We have, a note fund that we manage that accredited investors can invest in. Really where my wheelhouse is, Chris, is is, managing mortgage notes and managing a portfolio. So not to get too far into the the weeds here in the in the beginning, but, you know, there's three kind of legs to the stool for with a a mortgage note business similar to your business. One is finding capital, two is finding deals, and then three is managing both the capital and those deals. And when I say deals, I mean mortgage notes in our case. Well, that third leg is really where my expertise lies, and that's management of the portfolio. So I'm scaling on that side of things. To answer your question, I'm, I I've, networked and gotten access to additional capital, so I'm able to go out and find more deals and really focus on what I'm good at, which is management of a portfolio and then teaching other people how to do the same thing. Speaker 1
That's awesome. So okay. I was gonna go there next. So if I'm a Wiccan Smart listener and I'm and I'm I heard the intro, I heard that, I can choose to be passive or active. Can you define if I'm if I'm going, hey. I'm looking for something, like, inside of another niche or tacking on to what I'm already doing. They might be doing creative with us, for example, because he's married well. Speaker 3
Oh, absolutely. Speaker 1
Would active look like? Speaker 3
Yeah. So active really and and it is sometimes a little difficult for people to wrap their heads around this. And and to be honest with you, there you know, people want two buckets active or passive or, you know, black and white, but, obviously, there's a lot of gray in between. Nuances. Yeah. But to to kind of simplify it, active would be, hey. I wanna actually go buy a mortgage note or many. And, you know, I'm the the the person managing so I'm I'm doing due diligence on that that asset to purchase it. I'm I'm finding the seller of the mortgage note. I'm managing the day to day. If you end up, dealing with nonperforming mortgage notes, you're you're the person responsible for, you know, if if it goes in do you need to go for foreclosure or do a deed in lieu or if they if the borrower files for bankruptcy? Like, you're making all those day to day decisions and the operational decisions. That's a big that's a big deal. That's a lot of work, especially as you scale. So, you know, a lot of the the gurus out there will claim, oh, mortgage note investing is is passive all the way. Mailbox money, a hundred percent. Well, not not necessarily. So active means, look. I've got time. I have energy. I have some some capital, but maybe I'm not an accredited investor. But I I'm typically a younger person who kinda really wants to dive into this and learn the business of how to manage a portfolio of mortgage notes. It's very different from the passive investor avatar who whom we also serve. Speaker 1
Yeah. I appreciate your candor with the, you know, people say it's all it's all hands off. I because I I scream about this all the time when people teach this this stuff. It's not all roses. There's all kinds of nuances you opened up saying that. Like, there's just nuances Speaker 3
going on. Hundred percent. Okay. Speaker 1
So that's sort of active passive on the other hand because you because you specialize in management. Talk about that a little bit for the listener that might be like, yeah. I don't wanna be hands on. Speaker 3
Yeah. So, you know, there are many ways to get involved in mortgage note investing. That's really, as we said, our my niche here, as a passive investor. So in our case, we have I've I've managed a couple of funds, and we currently have one fund that's open. So I speak to that just as an example. Yep. We we have accredited investors who place capital with us, and then we take that capital and go out and buy mortgage notes, both performing and nonperforming mortgage notes. So as the passive investor in that case in investing into a mortgage note fund, that's about as passive as you can get in this in this, you know, this niche. We send a distribution to that investor every month. That's you know, the the track record speaks for itself. And and as an investor, you get an ACH into your account, then you get a k one and, you know, you file your taxes, and, hopefully, you you make money. Right? So you can certainly ask questions. You can certainly, you know, try to learn some, but you're as a passive investor in a mortgage note fund, you're not really there to learn. You're you're placing a lot more faith in in me or, you know, someone like you, Chris, as an operator, and, it's a lot less it's a lot more hands off. And so you have more capital than than, energy or time, and you wanna place that with us. There are many other ways to be a passive investor in mortgage note investing. You know, we can get into some of those nuances. You can be a a joint venture partner on a deal. You can be a joint venture partner on many deals. You know, you can there are other ways to, buy partial notes. You can be you can hypothecate notes. So these are terms I'm throwing out, and we're obviously not gonna go into all all the details there, but there are many ways to be a passive investor, in mortgage note investing. So I had a Speaker 1
couple things you saw me writing. One is, I know you can't make any claims, but but just in general, if I'm listening, what what could maybe someone perhaps expect passively on or from a return basis? Speaker 3
Like, what Speaker 1
have we seen? Yeah. Speaker 3
Yeah. So for our fund, it is a five zero six c, so I can talk about the targeted returns and, and talk about the track record. You're absolutely right. I'm not making any promises as far as going forward, and there's always risk. We have two different tiers in our fund, and we pay monthly. So that's a key thing. But eight percent and ten percent are the two levels that we have targeted, annualized returns that we pay. Now if you want to you know, flipping back over briefly to if you wanna become an active note investor, you're doing a lot more work. You should be rewarded for that. Right? So Yeah. Theoretical not theoretically. You you can, it's pretty common to see, you know, fifteen to twenty percent returns. To be honest with you, the returns have come down a little bit across the industry, which I think is not uncommon in the whole larger real estate space Speaker 1
Yeah. Speaker 3
In the last few years. Certainly, we've hit returns of thirty percent or higher on on certain deals, but that's not the norm. But as a passive investor, you can likely expect in that eight to ten percent range. The return is not the thing in that, you know, that that we're really it's it's a solid return, but that's not not really what we're competing with for the most part. This is much lower on the capital stack as far as risk goes. These are these are mortgage notes that are backed by first these are first lien mortgage notes backed by residential, you know, real estate within typically, we we buy in the Midwest or Southeast and, you know, markets that don't kinda go up and down quite a bit. So the point being there, there's a decent amount of security. Like I said, there's always risk, but we're not shooting for the stars here with the return. This is a you could even call it a slow, boring, you know, stable investment play. Speaker 1
And what do you see I got a few more questions. What do you see for, loan to values on those in those areas you're talking about, or is it all over the board? Speaker 3
Yeah. It a little bit all over the board, but what's nice is, you know, when we're buying, we don't have to buy. So Yeah. And we're often buying with a solid pay history there too. So that really helps. We're not we do some origination, but we really don't do a lot of origination of of loans. So we're buying preexisting debt. And so, typically speaking, we don't go over seventy five percent. Okay. Oftentimes, it's way lower than that because the the loan may have been around for quite some time, and real estate, as you know, tends to appreciate over time. And so that time is on our side in those cases. So seventy five percent is kind of our, you know, our max there. And and, typically, we will use the term ITV only because we're not originating, so it's an investment to value. Speaker 1
Got it. Speaker 3
Not it's essentially the same thing. Speaker 1
Not loan. Yeah. I gotcha. Nope. Good terminology. How about on both fronts, active and passive, Jamie, minimum amounts. So if someone's listening, they go, do I fit here or not? Speaker 3
That's a great question. I'll throw out the number twenty five thousand dollars. And I and I say that so our our fund, the Integrity Income Fund, the minimum investment amount is twenty five thousand dollars. And then if you wanna hit that ten percent targeted return, it's one hundred thousand. I'm also answering your question with twenty five thousand, for the the active investor because you you really do need some capital to get in this game. I mean, you you it's one of the mistakes I see people because I do mentorship and Yeah. You know, I wanna make sure people have some capital to work with initially because I really think you need to operate with your own your own capital first. Speaker 1
Yeah. Speaker 3
And you can get in the first lien mortgage note space with twenty five thousand dollars. It may be you may get one deal and then, you know, gotta figure out how to get creative after that. But but, twenty five to a hundred thousand dollars is a great starting point, you know, to to get started as either an active or passive mortgage note investor. Speaker 1
And if I'm active, what are my sort of deal sources? Right? Because that's what I think when I think of leads in my world. Right? Sure. Speaker 3
Yeah. It's a very disorganized and inefficient space. It's all about relationships. It's all about building that network. And I'm not dodging your question, Chris. Speaker 1
Yeah. Yeah. Speaker 3
It's the million dollar question that everybody wants to know. There are sites online sites. Paperstack is one of them. You can you can you know, I have no affiliation with them, but they you can go, check out that site. And and that's a great site, and sites like that are great because you can see, you know, more in more concrete ways what this guy, Jamie Bateman, is talking about on on this podcast. Oh, okay. I see what he means. I see what these terms are, what we're actually referring to here. You know, one of the downsides with a site like that is you may not know who you're dealing with, and it's hard to do due diligence on the buyer or the seller, the the other party. And so it's really a matter finding finding sources of of notes, it's really a matter of working your network. It's real it's a relationship space, and it changes all the time. You know? So I have a list of of sources, you know, and and, honestly, most of note investors in the space have probably a very similar list. Right? Yeah. And it ends up being, you know, the same four or five. There are note brokers out there. Dave Polio is one with SN servicing. He sends he's very active in the space. So you get on these lists, from, of note sellers and note brokers, and they'll send you what's called a tape. And that's simply an old school term of it's just a spreadsheet of notes and with a lot of data on that. So it's a long winded answer to your question, Chris. It's not like the New York Stock Exchange where you just, you know, oh, I'm buying at this price, and it is what it is. It's it's a lot less regulated. But that's that creates opportunity. Right? That's those inefficiencies are where opportunity lies. So you can find deals, just by networking and getting to know people and and building trust and relationships over time. Speaker 1
Interesting. So so something like Paperstack, what they so the note brokers, Claire, Paperstack acts like a note broker too as far as how it works Speaker 3
and behaves? Speaker 1
Yes. Okay. Speaker 3
I don't know that legally they're a note broker, but they they act like it it's an online exchange platform like in eBay or something like that. So, Yeah. I think, you know, they're a little less they they're they're more software based versus a note broker who's a little more hands on from a manual perspective. Speaker 1
Yeah. Speaker 3
But, essentially, they're saving serving the same function. Yeah. Okay. Cool. Speaker 1
You mentioned mentorship, and I you know, I'm big on this, and I think I've had a coach in some capacity in my life or if not three at a time since, gosh, I don't know, ninety nine. Right? Like, I I probably Speaker 3
had a Speaker 1
coach. So what does that look like? Who would fit that mold? And Yeah. What kind of commitment? Just talk about that a little bit. And then Absolutely. I don't wanna forget to ask you that. Speaker 3
Any site you wanna mention for yourself? Or Yeah. Thanks. Labrador lending dot com is our primary website, and you that's for both passive and active investors. And and to be clear, I'm both a passive and active investor. So it's not like we we're saying you have to be one or the other. Yeah. But for the most part, most people fit into one or the other, when they really boil it down. What do I actually want from this mortgage note investing? Our mentorship program is it's a hundred and fifty dollars per hour currently. It's an hourly thing. We it's a three session minimum. It's pretty straightforward as far as the commitment goes, and it's and it's honestly pretty low low commitment in my opinion. Yeah. What I need to see from people are that, you know, you are serious, and you actually wanna commit to this on some level. You know, we may have three sessions, and then you realize this isn't for me, either mentorship with with us or mortgage note investing broadly, maybe maybe it's not for you. But, ultimately, Chris, you're the the person is someone who has energy, a willingness to learn, willingness to listen, willingness to take action, and has some capital, like we mentioned before, to get started. And after that, once we, you know, we we'll have an initial call, and then once they they decide to sign up, it's pretty, there is structure, and I've developed different templates and different, you know, kind of a pathway forward for most people. But the nice thing about the our mentorship program is that it's not one size fits all. So your your experience in real estate, Chris, is very different from Yeah. You know, I don't know, a twenty two year old kid straight out of college or something. So if I were to mentor you versus that person, it would be a very different approach. We'd we'd be So they have the Speaker 1
three hours, but the different calls perhaps. Right? Different content. Exactly. Yeah. Speaker 3
So we end up a lot of what we end up focusing on for most people, though, building a buy box is really important. So what are you actually looking for? And, again, that's different for everyone because are you looking for cash flow? Are you looking for, you know, lumpy payments over time? Are you looking what are you looking for? How much, you know, how much capital do you have to to work with? Which states are you willing to buy? And this is a very state specific industry, and that's Speaker 1
Yeah. Speaker 3
Largely related to foreclosure laws and things like that. So building that buy box is a critical piece for people because you need to be able to as a as a new note buyer, as an active mortgage note investor, you really need to be able to, you know, speak into the universe. This is what I'm looking for. And if you can't do that, we we talked about the inefficiencies in the in the kind of the network of sellers. You really need to be active as far as declaring what you're actually looking for as a note buyer. And you the only way to know that is to take the time to build that buy box. So building a buy box for the you know, answering certain questions, about which assets, which type of assets you're looking to buy is critical. Another piece that we work with, newer node investors on is building out your due diligence checklist or or process. And it could vary, you know, based on different factors. Largely, that's that's focused on the asset itself. So the mortgage note itself that we're looking at and the property, that we can we could go into lots of detail on that. But but, also, I don't wanna miss the fact that doing due diligence on the on the note seller is critical as well. And a lot of that is is word-of-mouth and just talking to people about other people's reputation in the space. And so, lastly, I'll just throw in that one of the main benefits of working with, you know, with us and our our mortgage note mentorship program is also who you get connected to. It may not even be the main benefit may not even be from the the actual session itself. Oftentimes, it's I can introduce you to someone else in this space who can really help you in a specific area. Association. Right? Attorney. Association. Exactly. Yeah. But it could be a vendor you need or an attorney or just you know? And we're really here to help fast track you to get you to move forward. We don't really compete with courses people who offer courses or even a membership group, which I think both of those have a lot of value that that we don't frankly offer, at least not currently. So, you know, we're here to help kinda supplement that and and really add fuel to the fire and really focus and, kind of dive in deep on, is this a, you know, a particular deal you're working on as opposed to, you know, a course that may not really touch on the key your key questions in your in your specific situation. Speaker 1
Yeah. I love it. So the labrador lending dot com, is that that's where they'll go for, mentorship to anything they want, relative to our chat today? Speaker 3
Exactly. There's an investors tab, and if you click on that, it it goes to active or passive investors, and you can kinda get a better feel for what I'm talking about here, you know, which of those two paths you may wanna go down. If if you're a passive investor, there's an invest now button, and you can invest in our fund. But that, again, is for accredited investors only. We do have some solutions for the nonaccredited passive investor. We don't need to get into that today, but but we do we have tried to build out, you know, a solution for everyone Yeah. Who wants to get into this this space in some capacity. But labrador lending dot com is is where they'll find all that information. Speaker 1
Love it. Super interesting. You can tell I'm asking selfish questions that I I know. I hope it's liable for me listening. That's what I do with all my guests. Okay. What didn't I ask you, Jamie? Is there anything, you know, content wise or nuggets you wanna share? What, if you were me, what else could I be asking you? Because that was on my brain just organically as we kinda talk through things. Speaker 3
Yeah. Ask me what's a what is a downside to mortgage note investing? Speaker 1
Alright. Fire away. Yeah. I should have asked that. Okay? Good. Speaker 3
No. No. I why I asked the question. I'm just I and It's gotta be. Right? I say that somewhat selfishly because I wanna point out that I I think I like to keep it real. I I think I keep it real. Put it that way. You Speaker 1
and I both operate like that, so I appreciate it. Speaker 3
Yeah. So it's not a it's an asset class. It's a strategy. It's, you know, it's it's, like you said earlier, Chris, it's not all rainbows and butterflies and unicorns, and Yeah. Maybe it's not for you. Right? And so, that's all. There are pros and cons to every niche in real estate investing. There really are no inherent to answer the question, there are really no inherent tax benefits, to mortgage note investing. Typically speaking, you're gonna be, taxed at your ordinary income rate. So real estate, actual investing, buying a residential property that inherently comes with some tax benefits written into the tax code, not so with mortgage note investing. There are solutions for that such as working, you know, investing through a self directed IRA, but that's one downside to it. There's really no tax benefits. Speaker 1
Yeah. No. Well pointed out because, like, it's like saying in our world, someone does a lease purchase, they're getting whacked on taxes. But if they do if they buy a sub two or under financing, they have some some advantages there. And there's pros and cons to that. Right? Low active. So I I agree. Okay. Great. So labrador lending dot com, you guys, to get go ahead and get information about Jamie and get on the phone with him and see if you wanna explore that further. Jamie, really appreciate it. Is there any other any other, social media, anything else you wanna share with these guys that they can reach you? Yeah. I guess the Speaker 3
only other thing I'll mention, I think you mentioned this in the intro, is my the podcast that that you were on, Chris, and your son was also on, which both of those were recent and fantastic episodes. Awesome. From adversity to abundance. They're very inspiring stories. This year, we're really focused on making the podcast more practical and providing more practical solutions for real estate investors. So adversity to abundance dot com, and that is the number two. Not to don't wanna complicate things too much, but labrador lending dot com and then adversity to abundance dot com, the number two. The second website is for for our podcast. So Awesome. This has been this has been really good, Chris. I really appreciate the time, and I'm excited for the new year. And, you know, just, the future is future is bright. Speaker 1
That's awesome. I'm sure we'll be doing stuff together from a JV standpoint, and we'll continue doing podcasts. So I appreciate you being on, buddy. Happy New Year. Speaker 3
Happy new year to you as well. Thank you. Speaker 2
Alright. Here's the deal. You work hard for your money. Isn't it about time you put your money to work for you? If you are an accredited investor, check out labrador lending dot com. Our integrity income fund provides monthly cash flow from an investment backed by hard physical real estate. Our income fund, which is uncorrelated to publicly traded stocks and bonds, invests in first lien mortgage notes diversified by geography, property value, and borrower type. So you're not investing in one project. You're investing in a diversified portfolio of first lien mortgage notes. Our Integrity Income Fund aims to pay its investors monthly distributions at a preferred rate of return of eight percent annually. Possibly the best part though, the fund showcases a short twelve month commitment, So you can invest your capital today and have access to that capital in one year. Check it out today. Labrador lending dot com. 
