Mortgage Note Investing Explained: How Investors Become the Bank |S4E4

Total Disruption Podcast

Michael Libercci interviews Fred Moskowitz about the mechanics and opportunities within mortgage note investing. Fred details his transition

Key takeaways

• Fred MosIT transitioned from computer engineering after the dot-com bubble and 9/11 highlighted the risks of single-source income.
• Mortgage note investing involves purchasing the debt (the paper) secured by real estate rather than owning the physical property.

Main topics

• Mortgage Note Investing
• Secondary Mortgage Market

Notable quotes

What about if we were to talk about investing in the paper, which is the finance behind all of those properties?

Conclusion

The episode serves as an introductory guide for investors looking to d

Transcript preview

Speaker 4 (0:00) Don't miss the USL Championship Final on CBS, November 21st at noon Eastern. Will the Pittsburgh Riverhounds retain their crown, or will new title winners emerge? Don't miss the conclusion to the 2026 season, Saturday, November 21st, noon Eastern, on CBS. All Speaker 2 (0:50) right, let's welcome our friend Fred Moskowitz of Total Disruption. Welcome, Fred. How are you? Speaker 1 (0:56) Hello, Michael. Great to be here. Thank you for having me. Speaker 2 (0:59) Well, yeah, on behalf of my co-host, Jake Glendening, who couldn't be here today, I just want to say, man, I am super excited for this interview. You are in a field that I... holding the iron beer to my heart and you know it's it's kind of a mystical area right in the in the world of business it takes a lot of guts a lot of balls and a whole lot of risk management right it takes it takes an eye a keen eye and a sixth sense and i respect your profession i respect you and i'm dying to dive in on your journey so why don't you just kind of bills information will be in the show notes but Just say a little bit of Phil. Fred's information will be on the show notes and he'll fill you in right now on what we need you to know about him. So why don't you fill us in, Fred? What is it that brought you here and what is it that you do? Speaker 1 (1:56) Thank you. Thank you. I'll share a little bit about my journey. I started out. with having a very long and successful career working as a computer engineer. And I spent many years working at different tech companies, startup companies. And after I watched my entire industry get flipped upside down from the bursting of the dot-com bubble and uh around that time we then had the september 11 terrorist attacks so all this turmoil in the world and i realized that Speaker 1 (2:38) I was living and working in a way where I was way too dependent on the income for my job. It was my only source of income was that paycheck. And I loved the work I was doing. However, each job, I came to realize that it was just all full of all these circumstances completely out of my control. So what I learned, Michael, was that no matter how talented of an engineer I was or how valuable of an employee I was, that if things were not going well financially at the company or in the industry overall, that I could quickly lose my job through no fault of my own. And with that, I would lose my only source of income. And so I can't... Don't Speaker 4 (3:28) miss a minute of United Soccer League action. The USL Championship and USL League One are on CBS Sports and ESPN platforms all season long. With additional coverage on Sirius XMFC Channel 188 and select matches available in Spanish on 2DNA. It's your time to take part in building what's next. Visit uslchampionship.com or uslleagueone.com. for complete listings find your local club and be part of what's next this Speaker 1 (4:01) realization that was becoming very important for me to build other sources of income so i would not be reliant on the paycheck for my job and so with that i started getting involved in alternative investments and started with investing in real estate, doing all kinds of deals and properties. And after a few years of this, I got started to learn about note investing and to keep this at a very high level. What what is mortgage note investing? Well, it's all about instead of investing in real estate and owning the properties, right? Everyone knows about. owning and renting out single family houses or commercial properties or vacation properties, apartment buildings. But what about if we were to talk about investing in the paper, which is the finance behind all of those properties, the notes, the mortgages. And for us as investors, I feel it's a very interesting part of the real estate business. Speaker 2 (5:15) So if I may. You know, sort of interject here for a second. So those of you that are following along, when you say alternative investing, Speaker 1 (5:23) you Speaker 2 (5:24) mean like alternative to like stocks and bonds, right? Yes, exactly. So you're going for land, you're going for houses, you're talking about apartments, you're talking about commercial real estate, or you're just, you're talking about residential real estate. And you say that the mortgages. Speaker 1 (5:42) It can be all of those. I focus on residential. But yes, you are correct and accurate. That's a very wide span and can touch on all of those different areas. But my focus is residential mortgages. And the reason why, it's very simple. It's because there's the most of them out there is so many available on the secondary market. And so I've never had any reason to go beyond that. And let's face it, Speaker 2 (6:16) everyone understands a single family house, right? Yeah, let's walk everyone through this, right? Okay, so I buy XYZ. I buy 123 Memory Lane in Boise, Idaho. Yeah. And I own the mortgage. I get the mortgage through. I get the mortgage and then it's sitting there and I make my monthly payment living in my home. Speaker 1 (6:45) Well, yeah, this is a perfect, perfect intro. Speaker 2 (6:50) So Speaker 1 (6:50) you're sitting there making your payments to Rocket Mortgage or the bank, whoever it was that created that loan for you. And then, and I'm sure so many of you listeners can relate to this. One day out of the blue, you get this letter in the mail that says, Dear Mr. and Mrs. Holmes, Like Speaker 3 (7:11) what you hear? Turn into USL All Access Live. every Tuesday at 8 p.m. Eastern on Sirius XM FC channel 188 for exclusive interviews and the latest from around the USL. The exclusive satellite radio home of the USL, Sirius XM FC is North America's only 24-7 source for engaging soccer talk and live matches from the USL, Premier League, and more. All on Sirius XM FC channel 188 and the Sirius XM app. owner Speaker 1 (7:43) we're writing to let you know that your loan is being sold here's the address of the new lender here's their phone number and starting next month please send off your payments to