Comparing Cash Flow on a Rental vs. Cash Flow on a Note

Spoiler alert: one of these doesn’t involve plunging a toilet at midnight.

Let’s get right into it.

You’ve built up equity. You’ve maybe even had that “be a landlord” dream—the one where you kick back and collect rent checks each month like clockwork.

But then the reality hits:

Broken water heaters.

Late rent.

HOA letters.

Property taxes.

Maintenance reserves.

Evictions.

Meanwhile, someone mentions note investing. And suddenly, you’re wondering:

“Wait… I can get cash flow like a rental—without actually owning the property?”

Yes. Yes, you can.

And in this blog, we’re breaking down exactly how the cash flow from a mortgage note compares to a rental property—and why many investors are making the shift.

🏠 Rental Property Cash Flow: Let’s Do the Math

Let’s say you buy a single-family home for $250,000. You put 20% down and rent it out for $2,000/month.

Sounds decent, right?

Now subtract:

• Mortgage payment

• Property taxes

• Insurance

• Repairs and maintenance

• Vacancy rate

• Property management (if you’re not doing it all yourself)

By the time the dust settles, you might be netting $300 to $500/month on a good month.

And don’t forget:

• You’re on the hook for any major repairs

• You need to handle tenant turnover

• You’re one bad month away from negative cash flow if something big goes wrong

Fun fact: According to a recent survey, nearly 70% of landlords report unexpected expenses eating into their cash flow every single year.

💸 Note Investing Cash Flow: Same Idea, Less Chaos

Now let’s look at a performing note.

You purchase a note for $50,000 with a borrower who still owes $65,000, paying 9% interest over time. Monthly payments come in around $550–$600/month.

Guess what?

• You’re the bank.

• No plumbing.

• No tenants.

• No property taxes.

• No maintenance.

• No 3 a.m. drama.

Your cash flow is net of expenses because there are hardly any. Maybe a small fee for a loan servicer. That’s about it.

So while your return on paper might be similar to a rental, the real return—the peace-of-mind return—is much higher.

Head-to-Head Breakdown:

Feature	Rental Property	Mortgage Note
Upfront Cost	Often $50K–$100K+ down	Typically $30K–$70K per note
Monthly Cash Flow	$300–$500 (after expenses)	$400–$600 (with minimal costs)
Active Involvement	High	Low
Responsibilities	Tenants, repairs, taxes	Collect payments (via servicer)
Risks	Vacancy, damage, legal issues	Default (mitigated through due diligence)
Tax Benefits	Depreciation, write-offs	Interest income (talk to your CPA)
Exit Options	Sell the property	Sell the note

So… Which One Wins?

It depends on what you're solving for. If you’re looking for:

• Control over property

• Physical assets you can improve

• Tax write-offs from depreciation

...then rentals might still serve a purpose.

But if you’re after:

• Predictable monthly income

• Less involvement

• True passivity

...then note investing is the stronger cash flow play—especially if your time and mental bandwidth are just as valuable to you as your money.

And if you’ve already done rentals? You’re exactly the kind of person who can appreciate the simplicity and efficiency of notes.

A New Way to Think About "Passive"

Real estate investing doesn’t have to mean late-night tenant calls or crossing your fingers during every storm.

You can keep the cash flow

 … and skip the clogged toilets.

You can own the paper

 … and let someone else own the plumbing.

That’s the note investing difference.

I’m Hànanda Whittingham, and let me help you invest in a LIFE you LOVE.

Want to see how your rental cash flow stacks up against a note? Let’s run the numbers together.

Schedule a Call