Buying the Debt, Not the Property: Jamie Bateman on Mortgage Note Investing, Asset Management, and Private Lending
Episode Details
Transcript
In this special crossover episode, Jamie Bateman — host of the From Adversity to Abundance Podcast and fund manager at Labrador Lending — steps to the other side of the mic as a featured guest on the Real Estate Pros Show with host Michelle Tack. Jamie pulls back the curtain on what it truly takes to build and operate a mortgage note investing business, from sourcing deals and raising capital to the day-to-day realities of asset management.
Jamie shares candid stories from the field, including borrower situations that took unexpected turns and deals that tested his problem-solving skills. Whether you're new to the concept of note investing or looking to deepen your understanding of this niche, this episode gives you an honest and grounded look at what it means to operate at the intersection of real estate and finance.
Episode Highlights:
- Note Investing Unpacked: Jamie breaks down what mortgage note investing actually is — stepping into the shoes of the bank, buying existing debt, and managing the paper rather than the property.
- The Realities of Asset Management: From active foreclosures to bankruptcy cases, Jamie reveals just how hands-on running a note portfolio can really be.
- When Deals Go Sideways: Jamie shares real case studies, including a borrower who passed away mid-bankruptcy and a hard money loan gone wrong — and how he navigated both.
- Originating vs. Buying Notes: Jamie discusses his pivot toward originating more loans and why bridging the gap between note originators and note buyers is a major opportunity.
Key Takeaways:
- Projections are a starting point, not a guarantee — every note has a story and rarely plays out exactly as planned.
- Buying correctly gives you options; even when things go wrong, a well-purchased note leaves room to recover.
- The human element in owner-occupied note investing is real — people skills matter just as much as financial acumen.
- Intentional networking, not just social media presence, is what drives deal flow and capital in the note space.
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https://labradorlending.com/investors/passive-investors/
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Website:https://www.adversity2abundance.com
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LinkedIn:https://www.linkedin.com/in/jamie-bateman-5359a811/
Twitter:https://twitter.com/batemanjames
Speaker 0
That is one thing that's actually really interesting about mortgage note investing is every note has a story, and you never really know how it's gonna go. So Mhmm. You can sit there and and pencil out with your projections your, you know, fancy, you know, calculator or whatever it is, and and and project your your your yield or your your ROI. And, it's gonna be wrong. No matter what, it's gonna be wrong. It might be better. It might turn out better than you you thought. Speaker 1
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 background as a combat veteran, former army officer, and multimillion dollar mortgage note company owner, Jamie brings a wealth of Speaker 0
knowledge and inspiring stories to each episode. Speaker 1
Through weekly episodes featuring inspiring stories to each episode. Through weekly episodes featuring insightful interviews with industry leaders and solo explorations of mindset and strategy, listeners will uncover actionable advice and tips to overcome Speaker 0
challenges and build lasting financial success. Whether you're Speaker 1
a seasoned investor or 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 2
Hi. I'm Michelle Tack. I am the leader of Real Estate Pros podcast today, and I'd love to introduce Jamie Bateman. Hey, Jamie. Just say hi to the folks. Speaker 0
Hello, folks. How are you doing? We're hoping to bring some value to you today. Speaker 2
Absolutely. One of the things that I really believe is a strength that, Jamie brings as a subject matter expert is as a buyer of mortgage notes, running a fund that does that and the amount of work and effort that's, in that, area. So we're psyched to have you here, Jamie, to go through, the good, the bad, and what's really exciting about what you do. So, in terms of if no one knew about mortgage notes and how to Right. You know, that area of the the business, which a lot of people don't, as you had Uh-huh. Rightly said in our pre podcast, interview. Can you tell me a little bit about, you know, those people that are listening in a short summary of your world, what you do Sure. And what markets you serve? Speaker 0
Yeah. Absolutely. And it does get into the weeds very quickly, so I'll try to keep it high level. Speaker 2
Not a problem. Speaker 0
But, a lot of people are, as you alluded to, unfamiliar with even what a mortgage note investor does. And so as a fund manager, we you know, there there are three parts to running a fund. One is finding capital raising money. The the second is finding deals, which in our case is mortgage notes, and the third part is managing those two. With regard to being a mortgage note investor or buying mortgage notes like we do for our fund, essentially, we're looking for, not not essentially. We are looking for previously originated mortgage notes, so existing mortgage notes. Those tend to fall into two buckets. One is institutional. The other is seller finance or pre privately created, notes. Mortgage notes, as as most people are familiar, a mortgage is is, you know, comes from a a lender providing a loan to someone who wants to buy a house or in some cases, you know, an investor trying to buy a property. But that loan, will be attached to the property via a lien. And so we focus on first lien mortgage notes. And so when we buy a first lien mortgage note, we do buy some seconds. We do buy land notes. We bought some commercial paper as well. But for this discussion, first lien owner occupied mortgage notes, that's what we focus on. We step into the shoes of the the bank, essentially, if it was a a bank that that, originated this loan. And it could be in default or it could be performing, so it could be performing, reperforming, or per or nonperforming. Mhmm. But we we step into the shoes of the bank. We are not a bank. We're not a lender if we're not originating the loan. We're actually, an investor, a mortgage note investor. And so we buy that debt, and so the way to think of it is Speaker 3
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We don't own the property. We're not dealing with tenants toilets and trash, but we are dealing with the paper. And so it's kind of a if you did a Venn diagram with, you know, the the property, in one circle and then kind of, like, finance or, in the other circle, we're kind of in that middle. So we're you know, is it am I a real estate investor? Yes. I like to think so. I also do rental property investing. But am I in finance? Yes. I think so as well. So it's kind of a blend between, you know, the financial world as well as the real estate world. So we step into the shoes of the bank or the lender. We buy that debt, and now that borrower is required to send us those those payments that are due. Mhmm. We can get into different aspects of that. Okay. You know, why why people sell loans and that kind of thing. Speaker 2
But that's a great explanation. I really appreciate that. Sure. Speaker 0
One of Speaker 2
the things that impressed me and you wanted to stress was, you know, obviously, you are you understand the entire milestones that have to occur from looking for that note and have the operational piece, run smoothly. Can you talk about, your knowledge? Because you've been doing this for a while. How you're able to make it a successful business from a operational side of the steps that Speaker 0
you go through. Yeah. I mean, you know, I started out doing being more a little bit more passive than I am now. I started doing some joint ventures with people. There are different ways to get into this space, if you're not instantly looking to run a mortgage note fund. But some of the, you know, really, everything falls into one of those three buckets. It's finding capital, finding notes, and managing the notes and the capital. And so, a lot of the how we spend our time, quite honestly, is is, asset management. And so Mhmm. When we buy defaulted notes, for example, there's a lot to manage with regard to, you know, running the operations of the business. And so a large part of those operations are focused on asset management. So, for example, my fund currently owns thirty nine mortgage notes. Well, seven or eight of those are in in are beyond ninety days delinquent. So we've got five or six active foreclosures going on, one one REO, probably seven or eight that are in bankruptcy. And so there's a lot with regard to managing bankruptcy, trustees, attorneys, communicating with your loan servicer, making sure sure that things are moving forward because, ultimately, we're the ones that own the the notes, and nobody cares about them more than we do. So there was there's a lot with regard to asset management that people do not that that people often underestimate with regard to the effort and time that it takes to run this business. Mhmm. Now to be clear, you can buy a couple of performing first lien mortgage notes and spend thirty minutes a week and and make some cash flow for sure. It's not one or the other. There's there's a kind of a spectrum with regard to how active you wanna be in this this business. But that that gives you a little bit of insight into what it takes to kind of run be an active mortgage known investor. Speaker 2
Now and that was a very detailed explanation, which I appreciate, and I think the team will. Now every operator always has some challenges. Right? I mean, I don't care what type of company you run. Obviously, we're talking about real estate and real estate affiliated businesses. But can you give for the purposes of, you know, what you may have learned through this process, what have you, of a recent deal that you were dealing with, like, within the last year maybe, if you have one Mhmm. That's starting to go south, but you were able to pivot really quick. You did something quickly. Mhmm. Or maybe it wasn't even quick, but something that you pulled out to try to save that deal. And it could be a deal. It could be a relationship. It doesn't have to be necessarily the function of finding that, mortgage note and Speaker 0
Right. Speaker 2
Capitalizing on that. Speaker 3
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Yeah. I mean, you're absolutely right. There's, that's all that's being an entrepreneur, being an investor, an active investor, that's that's all you're dealing with is is problems. Right. Right. Right. Right. Right. I don't mean to be negative, but that's what it is. You're you're solving problems and challenges. And so, we have, you know, numerous challenges every day, with regard to both raising capital and finding notes and and then also managing those. You know, so, that that is one thing that's actually really interesting about mortgage note investing is every note has a story, and you never really know how it's gonna go. So Mhmm. You can sit there and and pencil out with your projections your, you know, fancy, you know, calculator or whatever it is, and and and project your your your yield or your your ROI, and, it's gonna be wrong. No matter what, it's gonna be wrong. It might be better. It might turn out better than you you thought. But Right. And so but what you can't really predict, you know, is is how the borrower's gonna cooperate. And then you really one of the biggest, I guess, hurdles you have in this space, particularly with owner occupied, mortgage note investing, is we'd are not able to get inside the property. So, you know, that can be a huge surprise when you finally get inside the property. We do buy some loans that are on vacant properties. Mhmm. Those are a little bit different. But in general, the loans we buy, these are owner occupied notes. So you you're not able to get into a full interior appraisal and, you know, or BPO and get a a property value estimate. Right? So that's really where we've lost money on deals before is from undervaluing the property. Mhmm. Man, there's so many they're Speaker 2
they're always interesting. Speaker 0
Yeah. Yeah. Yeah. There are always surprises with this. I've got tons of case studies and stories. I mean, we had a borrower who was, paying through bankruptcy, and he he passed away, in September. And, yeah, and then, you know, what what you know, navigating kind of the human element at this is it can be really tricky, and that's one reason that I, keep a distance. I I'll I'll use third party vendors, like a loan servicer, for example, to deal with the communications with the borrower. So in this case, this this person passed away, and and, you know, we're left with the option of, pursuing foreclosure. And so what you have to do is get a relief from stay, and and then, his spouse is currently in the in the house, and she legally doesn't have any right to be there at this point. So navigating that where, you know, I'm not trying to kick her out on the street, obviously. So but at the same time, if we don't kinda give her notice to vacate, we we're waiving a lot of our own rights and not protecting our investor capital. So there there's a balance there of of making money Mhmm. And also, you know, being a being a good person. So Right. We're we're actively navigating that, and I'm I'm working with a real estate agent who I think has, some some good people skills to be able to kind of work with her. And, you know, it's not just numbers on a spreadsheet with mortgage note investing. There's there's the human element with specifically with regard to the borrower. Another quick example, and, this is not resolved yet either. I had a hard money loan that I purchased. It's gone terribly wrong, quite honestly. But what protects us in this case is there's a buyback clause in the contract. So when we bought this note Speaker 2
Oh, wow. Speaker 0
There's actually a buyback clause. And so, unfortunately, we're you know, fortunately, that clause was there, but, unfortunately, we're having to pursue that legally to enforce, the note seller to buy this loan back. And so there there's you know, the you never know how a case is gonna go. You never know how what the story is going to be with a particular mortgage note. Mhmm. But if you buy correctly, even if it goes through the property, through the borrower, or even through the note seller, those are kind of the main exits, really, where you could sell the note. If you buy correctly, you can make some some missteps here and there with asset management or, you know, but if you buy correctly, you you have options. I guess that's really what I wanna get to is then you can then you can pull out whichever tool you need for the for the situation. Speaker 3
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That's awesome. I have two last questions for you. Can you talk about your next goals, where where you're trying to take the business over the next year, obviously, short term, maybe the next six months, but then longer term as well. Speaker 0
Yeah. So we have a fund. It's called the Integrity Income Fund. It's for accredited investors to who want to earn a passive return. You know, we we pay monthly distributions. We've had the fund for four years. We've never missed a distribution. I'm actively trying to raise more capital for that fund to serve more investors and, provide a stable source of income for investors. We're trying to get that fund beyond three million dollars. Current currently has about one point five million. And it's a five zero six c. We can talk about it, and and, it's it's it's, you know, public. I can advertise and everything. So that's that's where we're trying to go with regard to the Integrity Income Fund. One thing, that we're actively actively pursuing now is is pivoting a little bit, not not not a one eighty, but pivoting somewhat to start originating more notes. This may just quickly, also answer your prior question, the way we were able to solve a problem. And it speaks to what we're trying to get into more in the future as well. We were able to we took back a property through a a reverse mortgage. It was vacant. The property ended up being much, lower in value than I had anticipated, and that what the prior BPO had showed. So this was a property in Tennessee, finally take it back through foreclosure. It was a deceased borrower. We we didn't kick anyone out of their home or anything. Mhmm. And we got the property back, and it was it was a very, in much worse condition than we had anticipated, and the property value was much lower. We were able to find a good, borrower slash buyer with a credit score of over eight hundred, and we did seller financing to that to that person. And he's already made a couple payments. And so, you know, things are going well with that. I I thought that could be pretty pretty, not not a disaster, but it was not looking good. Yep. I'm not gonna say it was a home run, but it it we were able to navigate that situation by instead of just listing this this property to, you know, for sale to an investor, we sold it on terms to someone who's gonna fix it up and live in it, and he has a personal interest in living in this property. So we were able to find that person through networking and other other ways, and it looks to be a good solid performing loan with a high high interest rate and a very qualified borrower. To your to your point, your question, I'm trying to originate more loans and and get into a little bit more private lending, not not fully, but that's, an option within our fund. So instead of just buying existing debt, also originating more loans. Yep. And and I think from my perspective, I I my my from my experience, I've got, the ability to understand what a good mortgage note looks like from a buyer's perspective, a note buyer's perspective. And a lot of a lot of loan originators never even think about, what if I need to sell this loan? What is it what does a note buyer look like? Look for, excuse me. And that those two worlds are often separated completely. The note originators and the note buyers, they they don't even speak to each other in many cases. So I'm trying to originate more paper that may be attractive to sell to a note buyer. Speaker 2
Yeah. You know, what you talked about was very important. Right? The level of detail that is not, as we talked about previous to the podcast, knowledge that isn't out there. You're really in a niche play, and you're Yeah. Doing sort of both sides of the coin there. And, you know, I think and I hope, the, folks on the podcast really understand how important that is, that subject matter expertise. The other thing that which will lead into my last question, I think, is really, you know, evident from the conversation with you is a prioritization of your people skills and your ability to work with people because given, you know, someone having passed away to be able to be deaf Yeah. At that is not an easy skill that takes some some time. We develop that over a lifetime, quite frankly. But I Speaker 0
don't think we're ever done with with that. Right? Developing that skill. Speaker 2
Right. So the last part of that that goes into that is tell me a little bit about your networking. Mhmm. And often Mhmm. That is undervalued. Speaker 0
Yeah. Speaker 2
I mean, real networking, not like I'm posting on LinkedIn every day. Right. Network that you can tell me go back to that's feeding you and maybe Mhmm. You know, things that you wanna aspire to in your network. Speaker 0
Right. That's a great question. And I do think I have a a small team that helps me with marketing and things. We do lots of social media. We I've got my own podcast. It's called Right. From adversity to abundance, and we do a lot of posting and a lot of, you know, email marketing and things. And it it's important, and branding is important, and people will Google you and check you out Yeah. Online, and they should. But it's not enough. And and, honestly, it's one of the areas networking intentionally is one of the areas I've probably there's room for improvement. I certainly have strong a strong network in in in various, from various, you know, aspects of my life. We talked a little bit about pickleball before we hit record here, and that's, an area that's grown in my in my own you know, as far as my own network goes. Mhmm. But I had lunch last week with, an older gentleman who has done hard money lending for the last many, many years, and he's done quite well with it in the in the Baltimore area where I am. Mhmm. He he reached out to me, but I I immediately said yes. And I realized I need to be doing more of this. And so one of the other ways I'm working on just to kind of developing my network is working with our our investors in our fund and having direct one on one more direct calls with them one on one and asking them, what are we doing well? What what can we approve improve upon? Who else do you know in your network that might be interested in in investing in our fund and receiving, you know, monthly distributions? So I have those a network and a pretty, I think, quality network. I do think there's room for improvement with regard to being more intentional in developing that network, not just with the approach of what can I get, but but also what can I give? And I I do value I do value adding value Mhmm. To people. I I just think I personally could be a little bit more active in in developing the the that network and and intentionally just looking for opportunities to add value. So, yeah, lots of different areas of my own, you know, I guess, lots of different subnetworks, if you will. I've got the the social pickleball network and then, you know, my college network from from my athletic days, and then, you know, the real estate investor network. And I know we're we're probably almost out of time here, but we I am intentional about setting up I'm in a part of a couple of different informal mastermind groups. There's it's they're not paid or anything. It's just a group of people, peers who get together and wanna share, you know, lessons learned and and help each other. Group of us just met in Orlando a couple of weeks ago and just it it was basically twenty four hours of actual, you know, work. Just one day where we kinda sat down, went through each person who was on the hot seat, and we, you know, we we went through and provided feedback. This is what I think this is what I would do in your situation. This is what I think you're doing well. You know? This is what you should focus on. And and but developing that peer network is huge in the mortgage note space. Most of the mortgage notes I've purchased and sold have been from fellow investors. And so that's from the network. It's not from an online site. It's not from walking into a a branch of a of a bank and say, I wanna buy some mortgage notes. It doesn't it doesn't work out. Speaker 2
Exactly. Exactly. Well, look, you've been, a great we really appreciate all of your insight, and I really wanna thank you for being on our podcast. For those that are listening and find value from this podcast, please ensure Speaker 0
Yeah. Speaker 2
To continue to subscribe to, our podcasting, subscription model. There's a lot of great content there. And, again, Jamie, thank you so much, and best, wishes for continued success. Speaker 0
I appreciate it, Michelle. If anyone wants to reach out, labrador lending dot com is where to where to find me. Speaker 1
Thank you for joining us on From Adversity to Abundance. We hope today's episode has equipped you with valuable insights and practical advice to elevate your real estate journey. For more inspiring stories and resources, abundance dot com. If this episode has inspired you, please share it with a friend who could also benefit from our conversation. Together, let's turn adversity into abundance. Until next time, keep building your mental fitness and your real estate empire. 
