If a borrower files for Chapter 13, a judge could potentially "cram down" the interest rate or terms of your note.

If you buy that note for $80,000, your isn't 6% anymore—it jumps significantly because you paid less for the same cash flow.

In physical real estate, you check the roof. In notes, you check the .

The borrower has stopped paying. These are bought at deep discounts (often 30–60 cents on the dollar). The strategy here is "workout" or "liquidation": you either help the borrower re-perform, or you foreclose and take the property for a fraction of its market value. 3. The Power of the "Discount"