How to Build Passive Income Streams in Retirement: Exploring Mortgage Note Investing

by chrisseveney | Jan 28, 2025 | blog

Retirement is the perfect time to enjoy the fruits of your labor while ensuring your financial resources continue to grow. For many, passive income in retirement is not just a luxury—it’s a necessity. A well-structured passive income strategy can help cover living expenses, support your desired lifestyle, and provide peace of mind during your golden years. One often overlooked but highly effective method to achieve this is through mortgage note investing.

What Is Mortgage Note Investing?

Mortgage note investing involves purchasing the debt obligation that homeowners owe to a lender. Instead of owning the physical property, investors acquire the promissory note and collect monthly payments directly from the borrower. This strategy allows you to benefit from consistent income streams without the hassles of property management.

However, for retirees seeking truly passive income, managing individual mortgage notes can be labor-intensive. This is where investing in funds that specialize in mortgage notes becomes an attractive alternative.

The Appeal of Mortgage Note Funds for Passive Income in Retirement

Investing in mortgage note funds allows retirees to delegate the work of managing and servicing the notes to experienced professionals. Companies like 7e Investments focus on building portfolios of well-vetted mortgage notes, offering investors a hands-off way to generate steady returns. These funds take care of sourcing, purchasing, and managing the notes, ensuring you can enjoy passive income without the complexities or risks associated with doing it yourself.

By investing through a fund, retirees gain access to:

Diversification: Funds spread investments across multiple notes, reducing risk.
Professional Management: Experts handle due diligence, compliance, and borrower relations.
Consistent Cash Flow: Regular payouts make it easier to plan for retirement expenses.

advantages of fund investing for retirees

A Risk-Adjusted Strategy for Retirement Income

While all investments carry some level of risk, mortgage note investing—when managed properly—can offer a compelling risk-adjusted return. For example, at 7e Investments, strategies are designed with up to 3x equity coverage, meaning the value of the underlying property is three times the investment amount. This conservative approach helps mitigate risk and ensures that even in challenging markets, there’s a significant buffer to protect the investment.

Additionally, 7e Investments prioritizes detailed due diligence to assess borrower creditworthiness, property values, and market conditions. This meticulous approach enables retirees to invest confidently, knowing their capital is safeguarded by robust underwriting practices.

Why Mortgage Note Investing Is Ideal for Retirees

Predictable Income Streams: Regular monthly payments create reliable cash flow, essential for managing retirement expenses.
No Active Involvement: By choosing a managed fund, retirees eliminate the need for ongoing oversight or expertise.
Lower Volatility: Compared to equities or other high-risk investments, mortgage note funds offer more stability.
Attractive Returns: With well-managed funds, retirees can achieve returns that often exceed those of traditional fixed-income investments like bonds or savings accounts.

Why Mortgage Note Investing is Perfect for Retirees in Their Retirement Years

Final Thoughts on Passive Income in Retirement

For retirees exploring ways to build passive income in retirement, mortgage note investing provides a powerful, underutilized strategy. By investing in professionally managed funds, you can enjoy the benefits of this alternative investment without the operational burden. With firms like 7e Investments focusing on risk-adjusted strategies and prioritizing investor security, mortgage note investing can be a cornerstone of a diversified retirement income plan.

Take the time to research and partner with a reliable fund manager to ensure your passive income strategy aligns with your financial goals, offering peace of mind and financial independence throughout retirement.

how to build passive income streams in retirement with 7e Investments