Feed: Cash Flow Notes - AggScore: 43.0

Structuring Your Note For The Future Sale

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Sellers that offer owner financing would do well when putting together financing for a buyer to consider the future sale of the note even if selling the note in the future is not a consideration presently. We have no idea what the future holds so it is in the best interest of the seller to structure the financing in the beginning in such a way that top prices can be obtained should you decide you want to “sell my note” in the future.

Although a seller would like to obtain at least thirty percent of the sale price in the initial down payment, this is unlikely especially in the current economy. Twenty percent is the norm you should expect and in some cases, ten percent. If at least ten percent cannot be obtained, you should seriously consider finding another buyer since future potential for receiving a good price for your note if you sell will be seriously curtailed. Obtaining a higher percentage down payment reduces risks substantially since a buyer is less likely to walk away from a property or be foreclosed on with a higher rate of investment in the property. Future investors will also be less likely to consider your note with a low down payment since this elevates their risk levels as well.

Your buyer’s credit rating will also have a substantial evaluation impact when investors consider your note for purchase. Owner financing can often help people with less than perfect credit scores, but sellers considering the sale of their note to investors at some time in the future, should consider the impact of your buyer’s credit rating on a future sale. Investors will look at your buyers credit rating since their habits of paying in the past will determine how they will pay them should they buy your note. The interest rate of your owner financing note will also be a consideration and should be a minimum of two to four percent higher than what can be had a traditional lending institution.

It’s true, by offering owner financing to people that cannot obtain traditional financing gives you a wider market in which to expose your properties, it does have a down side if not structured properly. Working with your buyer and negotiating terms of the financing can be ideal for both parties. However, if you give too much a way in the structure of the financing, you may be severely limiting your ability to market the note properly in the future.

What Motivates A Seller To Offer Seller Financing?

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We all know cash is king and at the end of the day, most sellers would prefer to walk away from the closing table with the cash from the sale in hand without holding a note. However, we know this is not always possible so individual sellers take the next best option, owner financing. But what are the benefits of owner financing other than if you decide you want to “sell my note” eventually, that motivates sellers to offer owner financing?

The largest reason to offer owner financing is it exposes your property to a larger market. People that can’t get financing through traditional means are many times, very good candidates for owner financing. Although some of the people that fall into this category are not creditworthy for various reasons and not worth the risk, others are of acceptable risk and can be considered viable candidates for owner financing. Considering these people as possible buyers can open your marketing efforts up to a whole new segment of potential buyers.

You do however, need to consider the reasons they are unable to obtain a loan through traditional financial institutions. Small down payments or no money available for a down payment may be one of the reasons. These people usually have jobs with an extended history but have for various reasons been unable to save enough money for the necessary down payment. Less than stellar credit history is another reason they have been turned down by traditional financial institutions, especially with the current credit crunch we are now experiencing. A lack of credit history is yet another reason. A recent job change or a change in career with no established record yet or self-employment income which can be a substantial obstacle for obtaining credit.

Some properties do not lend themselves very well to easily obtainable credit for a potential buyer. Houses located in neighborhoods with low property values are always a challenge and owner financing may be the only option. Properties in need of substantial and essential repairs often require creative financing in order to be sold. Properties that have been rental properties or multi-unit properties can be difficult to obtain bank-approved financing. Properties located in mix areas of both residential and business zoning many times are difficult to obtain traditional loans for.

There is the traditional reason sellers may offer owner financing - Investment. The housing market has been slumping for a few years now but this does not negate the fact hat people still need a place to live and call home. Owner financing offers the seller the opportunity profit off his property in slow times as will as hard times. In hard times it may be just a little more difficult to find a suitable buyer and require extra effort, but the choice is simple. Choosing between your property sitting idle and giving you a return on your investment is a strong motivator to get out there and find a suitable buyer rather than loosing money every month and draining your portfolio returns.

Cash For Notes - Taking The First Step In The Cash Flow Business

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The Cash Flow Business

When the term cash flow notes is used, it generally refers to the entire notes industry as a whole, encompassing many different types of notes which are bought and sold. Private note investors as well as financial corporations specializing in the “paper” industry pay out millions in cash for notes to private note holders and other investors each year. Notes come in many forms and each transaction is unique. Although the real estate note is by far the most common type of note transaction, it is by no means the only game in town when it comes to the cash flow business. Below, we have compiled a list of the most common types of notes that are bought and sold.

Want to become a note broker? Click here and learn more

First things first as we begin. The Cash Flow Business can be very lucrative! Lucrative for those individuals willing to put forth the effort to build a business based on "paper" transactions which take place everyday. What makes this business so great is it is open and available to anyone. It doesn't require a four-year degree or a talent for accounting. One thing it does require though, is a willingness to do some hard work, especially in the beginning. If you are looking to get rich quick, then this business is not for you. There is a learning curve before you will be profitable for sure, as there is in any legitimate business venture. However, the beauty of this business is anyone can do it and there are readily available resources that can be purchased inexpensively in study course format that can help you get up to speed a great deal faster. One thing for sure is there is money to be made!

Mortgage notes or real estate notes are without question the cornerstone of the cash flow notes industry and rightly so. Note brokers and investors actively seek out private mortgage notes also referred to as owner carry-back or owner financing. With these types of mortgage notes, the owner acts as the bank and carries the note until the balance is paid in full by the buyer. Owner carry back financing is offered by the seller for different reasons but usually owners offer to be the bank to make their property more profitable and marketable, making the property available to a wider market than would be possible if traditional financing were used through banks and other lending institutions.

First time home buyers and buyers with less than perfect credit also benefit from owner carry-back financing since financing is generally easier to acquire through a private seller than through traditional lending institutions. Private seller financed mortgage note holders often decide they do not wish to hold the note for the term of the mortgage and often offer up the note for sale for a lump-sum payment and cash out of the note. Cash for notes of this type is big business and note investors search for quality seller financed private notes.

Note investors build cash flow notes portfolios with various types of notes, however, owner financed private notes are the cream of the crop and aggressively sought out. The private mortgage note holder may choose to cash out of the note for all manner of reasons. Other investment opportunities may arise and the note holder may need to free up cash. A family emergency or college tuition for their children may be needed, Whatever the case, owner carry-back privately held notes are excellent sources of cash flow business income for both note investors and brokers.

Structured Settlements

Structured Settlements are another form of cash flow notes sought out by investors that pay cash for notes to sellers so they can add to their investment portfolios. Structured settlements usually are settlements awarded by the civil court system to compensate the injured party in a lawsuit. First appearing in the 1970’s as an alternative to lump sum payouts as a result of lawsuits, structured settlements have grown in popularity as a structured financial solution of compensation for injured parties. Most often the settlement takes form as a annuity which guarantees future monthly payments to the awarded defendant until the total amount is paid in full. The awards may come in any variety of judgments including lawsuits, medical malpractice suits, personal injury lawsuits or wrongful death settlements.

In April 2009, Suzy Orman is quoted as saying that structured settlements provide ongoing payments and reduce the risk of blowing a lump sum payment through poor financial choices. However, structured settlements often do not meet the needs of those people that have been awarded settlements and lump sum payments are needed. People that have been awarded structured settlements can sell their structured settlements to a cash flow notes investor or a financial firm specializing in purchasing structured settlements. However, when choosing to sell a structured settlement careful financial planning should be utilized since once the lump sum payment is received, financial prudence should be the foremost consideration. Cash flow note investors or financial firms offer a lump sum payout for the balance of the structured settlement less a discount off the total balance. The discount is to compensate the investor for assuming the risk of collecting future payments and providing the lump sum pay out to the structured settlement seller. Note investors seek out these settlements on a daily basis to add to their cash flow business portfolios.

Lottery Winnings

We very often hear about people that win the lottery but we seldom hear that many times the winnings come in the form of an annuity that is paid out over an extended period of time rather than a lump sum payout. Because the winnings take the form of an annuity with a structured payout schedule, they are considered a note and are actively bought by cash flow notes investors, providing a lump sum payout option to lottery winners so they can receive most of their lottery winnings rather than waiting years. Again, sound financial advice should be sought before selling your lottery winnings for a lump sum payout. Not only can lottery winners cash out there future payments, but slot winners and contest winners can also sell their winnings to cash for notes investors.


Inherited Annuities

Many people receive inheritance in the form of an annuity rather than a lump sum payout. As above with lottery winnings and structured settlements, inheritance annuities can also be sold to a cash flow notes investors or financial institutions specializing in purchasing structured note payments. Although it is not recommended to sell a inherited annuity, in some cases there is no other choice available to annuitants. Medical or emergency situations may arise and other financial options may not be available to the annuitant and selling the inherited annuity may be the only choice. Whatever the case may be, inherited annuities are also another form of cash flow notes available to the notes investors.

Learn How To Get In The Cash Flow Business

Build A Cash Flow Notes Business Brokering Or Buying Discounted Notes

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The Discounted Bank Note Market Is RED HOT!

One thing is certain, cash flow notes come in many forms, but the notes backed by real estate will always be the cornerstone of this business. There has never been a better time to enter the notes business than now. Why? Because there are about $12 trillion in mortgages on the books with about half not securitized leaving $6 trillion in mortgages. Let’s say ten percent are defaulted notes which leaves a market potential of six-billion dollars on the table. That is a lot of market potential available to someone savvy enough to grab a piece of the pie.

Become A Note Broker - Learn How

Finding cash flow notes, or defaulted mortgage notes is when you act as a note broker and bring both buyer and seller together and don’t use your own money. This strategy is now the largest and most profitable real estate investment strategy made available to real estate investors in the last quarter century. You can become a note investor without ever touching a piece of real estate. There is no need to be a landlord, no late night phone calls from tenants, no property upkeep. Discounted notes are sold everyday by banks which are struggling with the economy and housing slump. Banks are holding millions of defaulted notes in their inventory they are eagerly waiting to get off their books to improve their balance sheets.


How does this apply to you? First, you need to ask yourself, what am I wanting out of the cash flow notes business? Although cash flow notes come in many forms, as we said above, real estate backed notes are the bread and butter of the industry, so you should focus first on mortgage notes and in this case, defaulted discount bank notes. Secondly, do you want to be an investor or a broker. If you don’t have any money to invest in notes, that’s OK, you can start out as a note broker bringing buyers and sellers together and collecting on the transactions. Many people are successful brokers and have never spent a dime of their own money on a discounted note. Whatever the case, you can be successful in the cash flow notes business as either a broker or an investor although it is best to start out as a note broker if you have no experience and gradually move up to a note investor.

Thirdly, you need an education. The note industry is filled with jargon you need to familiarize yourself with before starting out. Learning is the first step to success and many have succeeded in the cash flow notes industry starting out not knowing what a note was in the first place. You too can be successful. The Cash Flow Notes Business Overview

For those of you that are unsure what the cash flow notes business is all about, below is a brief overview of what the cash flow business is and how it works. Although notes come in many forms, the note backed by real estate is the most sought after and most utilized within the cash flow notes industry.

Mortgage notes or real estate notes are held primarily by two different entities, banks or other financial institutions and private sellers or private investors. In this instance, we will look at the private note holder since they are the primary source of traditional cash flow notes where note buyers and note brokers are concerned. Although there is a huge market at this time available to cash flow notes investors within the banking industry as we covered above, we are only going to focus on the traditional cash flow note bought and sold by note investors, the private owner financed note which is the individual acting as the bank and holding the mortgage for individual buyers of their property.

First, let’s define owner financing. When a individual property owner, or seller in this case, allows a buyer to purchase property and agrees to act as the bank, this is referred to as seller financing. Others names for this type of transaction is owner financing, owner carry back or private mortgage note. Whatever name for the transaction is used, they all are the same - the private seller is acting as the bank for the buyer and allows them to pay for the property over time in installments just as a traditional lending institution would. The seller collects the normal down payment, just as the bank would in a normal property transaction and the buyer agrees to pay the seller back over time for the remaining balance.

What the seller has done is created a cash flow note for himself. However, this may not be exactly what the seller was initially seeking, especially in today’s housing market. In fact, he may not have wanted to hold the note at all but had no choice. The housing market is in the dumps as most of us all know, presently. The seller may have been desperate to sell the property but potential buyers were unable to get financing through traditional means, which are banks and other lending institutions. Credit has dried up and banks aren’t lending the way they were a few years ago and there is an argument that supports their position. Although this fallout has resulted in a booming market for defaulted bank note investors and brokers as we mentioned in the beginning of this article.

However, desperation on the part of the seller is not always the case. Smart investors create for themselves cash flow notes income streams by holding owner financed notes by doing what banks won’t do which is offering liberal financing terms to buyers that otherwise would not be able to get financing. These seller financed mortgages are the foundation of the cash flow notes business and create a huge secondary market within the real estate industry.

Cash flow note investors and cash flow note brokers actively seek out owner carry back financing to increase their on cash flow notes portfolio. Note brokers seek them out to collect a commission from the transaction by bringing a note seller together with a cash flow notes investor.

Selling A Structured Settlement To A Cash Flow Notes Investor

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Cash Flow Note Brokers And Notes Investor Answers

Doubled edged swords come in many forms and structured settlements can fit very well into this description as many structured settlement holders would agree. Although they are designed to pay out a certain amount each and every month, in many cases the structured settlement holder needs more money than what is allotted in the monthly payment. In these instances, structured settlement holders may choose to sell their remaining payments to a cash flow notes investor, or utilize the services of a cash flow note broker to locate a suitable note investor to purchase their structured settlement.

If you are considering selling your structured settlement in return for a lump sum payout of cash, there are some important details to consider. First and foremost, it is up to you as the note holder (structured settlement owner) to do as much research as possible until you have a complete understanding of the note selling process. You don’t need to be an expert, however it is advised that you the very least educate yourself so you will have a basic knowledge of the cash for structured settlements business and how it operates.

Seeking the advice of a financial advisor is strongly suggested. Your accountant or financial advisor are acceptable choices since the chances are very good they have experience in advising other clients about their structured settlements. The possibility also exist that they may even know individual private cash flow note investors which could be suitable note buyers to purchase your structured settlement. Note investors as well as note brokers already know the power of networking in the cash flow notes business and most likely have many accountants and financial advisers in their own networks which send them steady streams of business. Also your attorney is an acceptable source to consult before deciding to sell your structured settlement.

Once you have located either a suitable cash notes broker or a note investor, you should first ask for and be freely given a list of references. Current and former clients are the best sources of information. Also, when the term note investor is used in this article it refers to both individual private note investors and firms which buy structured settlements. There are an abundance of both individuals and firms which specialize in buying structured settlements within the cash flow notes industry.

A reputable note broker will insist on explaining every detail of the cash for structured settlements process to you so a complete understanding of the transaction is not in question. Once you have chosen a note broker on note investor, be prepared to provide detailed information about your structured settlement to the broker or investor. They will need this information to ascertain the guarantee on remaining payments owed to you. You will also need to know how much you expect in return for selling your structured settlement. Structured settlement holders choose to sell for various reasons with most selling for reasons of meeting obligations such as paying off debt, medical problems, college or in some cases to expand a business.

Whatever the case may be, it is important that you understand the whole cash for structured settlement process before committing to any broker or note investor. As with anything which involves money, there will be unscrupulous characters unfortunately in the mix. Due diligence on your part as the note holder will most certainly result in you receiving a fair price for you structured settlement from a cash flow notes investor.

Small Business Factoring And Improving Cash Flow With Accounts Receivable

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Small Business Factoring Solutions

Cash flow is the life blood of any business, big and small. But smaller businesses tend to experience cash flow difficulties more so than larger businesses. Small business factoring is a source of funding available to improve cash flow problems and keep the business running, even in difficult economic times. When the economic cycle is at a low point, credit tends to become unavailable from traditional business lending institutions, even for midsize to larger companies with solid creditworthiness. If this is the case, what options does a small business have if credit is unavailable? Invoice factoring in many instances is the solution for many hard-pressed businesses.

Small Business Factoring Defined

Most businesses operate on Net 30 terms, meaning payment is expected within 30 days for goods or services given. In a perfect world, the invoice would be paid within the 30 calendar days as specified on the invoice. However, as a business owner, you realize your customers are probably experiencing the same cash flow problems as you so payment of the invoice is often extended for more than 30 days. Larger companies usually have the resources to sustain the payment delays. Small companies don’t.

Small business factoring or invoice factoring as it is primarily called, was created as a financial solution for cash flow problems within the business world. Although small business generally operate on a net 30 form of payment, they seldom can wait thirty days or more to collect these payments from their customers. Small businesses rely on cash flow to pay their own operating expenses: Payroll must be paid, their own vendors expect payment, current work projects must be funded, the light bill, equipment must be maintained and purchased, the list goes on. As you can see, smaller businesses with few financial resources available often have to rely on the one major asset they have - accounts receivable.

Small business factoring is not at all complicated and is easily obtainable by most mid-size to smaller businesses providing they have a solid customer base and no unforeseen obligations on their assets. How small business factoring works is simple. A small business delivers goods or services to one of their customers, an invoice is produced to bill the customer for the goods or service rendered. Normally, the invoice would be sent directly to the customer with payment expected within 30 days. However, in this case the invoice would be sent to a company or individual investor that specializes in this type of funding called the factor or factoring company.

Remember, small business factoring is utilized to improve cash flow and reduce the amount of time it would normally take to receive payment on the invoice. Once the factoring company receives the invoice, the factor will assess the credit worthiness of the customer responsible for paying the invoice and if the customer meets the factor’s credit criteria, they will purchase the invoice from the small business at a discount. In most cases there are two transactions which take place between the factoring company and the small business. The first transaction is usually a payment to the small business for eighty percent of the total amount due on the invoice. This payment provides the much needed cash flow to the business to meet operating expenses on a timely basis. The second transaction, called the reserve, is the remaining twenty percent, less the factoring company’s fees. This second payment is made once the invoice is paid by your customer to the factoring company in full.

The Advantages Of Small Business Factoring

By far the largest advantage associated with small business factoring is improvement of cash flow. Turnaround time from invoice generation to payment of at least eighty percent of the total amount is reduced from weeks to a few days, substantially increasing needed cash flow to keep your business operating at it’s full potential. The scrutinizing financial examination which is normal operating procedure form traditional lending institutions like banks is not necessary. Invoice factoring is easily obtainable, which makes small business factoring ideal for businesses which normally have to wait weeks or even months for payment on an outstanding invoice. Working capital is quickly available, keeping you and your employees in business.

A Note About Small Business Factoring For Investors

Our next article will cover the potential available for cash flow note investors to create a new market and increase their portfolio with small business factoring.

Psychology In The Cash Flow Notes Business

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Negotiating With The Note Seller

Marketing will be and should be the largest aspect of your cash flow notes business once you become a note broker and is the engine that keeps your business going. However, once you find a note that is marketable the negotiations begin. Negotiations are just one step in the process of closing the note transaction. To be successful it is essential that you be prepared to negotiate with the note seller.

Once the negotiation process begins many enter with a static idea of what the outcome will be and this is the only acceptable result. This is a fundamental mistake since the end result of any negotiation should be a equally satisfactory commitment to the note sale agreement by both you and the seller. Never enter into a note negotiation without considering what you want as the broker, three possible outcomes - the best outcome and what you would ultimately want, the realistic end result for both parties and the ultimate bottom line which is anything less would be unacceptable.

You as the professional note broker in the cash flow business should always be prepared before beginning note negotiations. Be thoroughly prepared with important facts and of course the numbers. Being prepared not only confirms you as a professional but having them written down can help you illustrate your point and aid in the negotiation process.
Professionalism is of utmost importance. Note sellers are generally under pressure from forces outside the negotiations with you. They obviously are either needing cash or have some other issue they are dealing with or they wouldn’t be selling their note in the first place.

Always be polite and keep the discussions on the business at hand. We are all human and humans are blessed with emotions which help us relate to each other. However, keeping your emotions under control and avoid any indications of irritation or frustration with the note seller. These emotions will only cause the note seller to withdraw and become more rigid. Always have a positive attitude and keep the negotiations flowing smoothly. If a brick wall is reached, try to find another route to move toward a solution to the objection raised.

Remember the three possible outcomes mentioned above? Be willing to compromise and have them ready to offer in relation to compromise offered by the note seller. Demonstration that you are willing to compromise allows the cash note seller to you are willing to reach an agreement satisfactory to both parties. Learn the to listen. Let the note seller do most of the talking during negotiations and keep mental notes to access and utilize when you do speak.

Always let them make the first offer. Find out why they have chosen to sell their note. Ask them point blank what they believe to be a fair price for the note. Do they need to sell the entire note or part of the note. These are important questions you can ask that can give you clues as to what the notes seller’s ultimate outcome may be. Once you have this information, you have a point at which you can begin negotiating price. Never offer a price first or you may end up shorting yourself of money you could have made. Until you ask, you have no idea what the note seller wants for his cash note.

The cash flow notes business can be lucrative. Professionalism, preparedness and learning the art of negotiation is what determines success once you have located a marketable cash flow note. Although most of your time as a note broker will be spent marketing, it is important you hone your skills a negotiator.

Marketable And Unmarketable Cash Flow Notes

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Knowing The Difference Is Crucial

Generally when people get into the cash flow notes business they start out as a broker searching for notes, any note! It’s true, there are notes on just about anything where money is paid to one party to another over a set period of time. By far the most well known within the industry and most utilized are real-estate secured notes. These are the staple of the cash notes industry. Although there are investors that do specialize outside the traditional real-estate secured area, as a new note broker it is recommended to concentrate on real estate in the beginning.

Brokering notes should be the first step you take into the business since brokering is essentially risk free. By risk free we mean there is little if any cost to you other than your time and whatever you choose to spend on marketing which can be entirely free for marketing savvy people. Once you begin the process of locating mortgage notes you will quickly realize not all notes are marketable. In fact, some of the people that contact you through your marketing efforts will believe they have a note they can sell. As it turns out, they are the debtor on the note responsible for paying the party which actually owns the note. However, these very people can provide you with a potential lead to follow up on by contacting the party that does own the seller financed note.

As you move along over the first few weeks and months, you will quickly begin to recognize which notes are marketable and those which are not. Apart from marketing, which almost all your time should be spent doing, recognizing potential notes is the most crucial area in the beginning. As a note broker with no risk associated with your efforts, it is important to understand the cash note investors which will buy the mortgage notes you find are assuming all the risk involved. Wasting their time with unmarketable notes is a quick way to find yourself on a investor’s ignore list. When we speak of investors we are talking about the large paper buying firms or individual private investors.

Don’t assume note investors will screen your note for you. They fully expect you to have completed all of the screening work before they receive a phone call or fax from you with details about the potential cash note. The screening process is vital to your success as a note broker. You will need to obtain important information from the mortgage note holder such as what kind of property secures the note, are all the payments current, what was the sale price when the property sold (many investors have limits), how much money did the buyer put down, what is the balance on the mortgage. These are all important issues you will need to already have been answered before you ever contact your investors.

Establish relationships with your investors. Know their limits and what their criteria is for possible purchase of a cash flow note. Do as much of the preliminary groundwork as you possible can so the investor can quickly look over your note worksheet and quote you a price so you can begin negotiations with the seller. Other than marketing, acquiring the skill to quickly determine if a mortgage note is marketable or not will increase your chances of success as a cash flow notes broker exponentially.

Owner Carry Financing - How Do I Sell My Mortgage Note

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Locate A Reputable Note Buyer

Most outside of the real estate industry would be surprised at just how many owner carried mortgages are in place throughout the United States. Even more so since lending institutions have for the most part cut-off just about anyone with less than perfect credit.
Individuals are now more frequently, in essence, becoming the “bank” to many home buyers. Either out of necessity or to simply increase market interest in their property, offering owner will carry finance increases the odds of receiving a return on their investments.

But what about the mortgage note holder that is considering freeing up the cash he has tied up in the owner carry mortgage? He may be asking himself, “How do I sell my mortgage note?” Fortunately for the mortgage note holder, there is an entire industry devoted to buying and selling paper transactions called cash flow notes. Note investors buy various kinds of notes including owner carried financing notes just like the one held by the mortgage note holder. Interestingly enough, the transaction can be structured just about any way the mortgage note seller chooses. He can sell the entire mortgage to a note buyer or he can sell a selected number of monthly notes in exchange for a lump sum cash payment.

All cash flow notes deals are different depending primarily on the reason why the mortgage note holder wants to sell in the first place. Reasons vary from they want to make investments elsewhere and need to free up the cash, or maybe they have just tired of collecting monthly payments from the buyer or an emergency situation has created a need for immediate cash. Whatever the case may be, the mortgage note holder has flexibility in determining in which way he needs to structure the sale of the mortgage note.

Once you have determined you do in fact want to sell your mortgage note either in full or partially, you need to first locate a reputable note buyer. Knowledge, reputation and experience are the three key factors when seeking out a note broker before selling your mortgage note. A knowledgeable note broker will explain the entire process from how much you can expect to receive for your note, the necessary paperwork and closing. All that will be involved in the transaction can be handled professionally by a seasoned note broker.

Of course, when you first begin considering how to sell my mortgage note, the most important question to be answered is how much can I get for the owner carried note? This is where it becomes necessary to make sure you are dealing with a seasoned note buyer. All seller financed mortgages are different. You may have a personal relationship with the people you have financed residing in the house. However, on paper, they may be a higher risk than normal for the note buyer. Before the note buyer makes you an offer for your mortgage note, he must consider many factors including the risk involved.

Creditworthiness, age of the note, how many mortgage payments have been paid on time as well as late, appraisals, etc. Many factors go into the equation before the note buyer can make an offer. He is will be offering you a lump sum payout for the mortgage note at a discount. It may sound as if finding out how much can expect to receive for your mortgage note is difficult. An estimate can often be obtained within a day or so once you have provided the necessary information for the note buyer to make an informed evaluation.

Selling your mortgage note is not difficult but can be a bit overwhelming if you begin the process without doing some research and gaining a working knowledge of how the paper business works. Transactions are bought and sold within the cash flow notes industry everyday and not just real estate transactions. Odds are the note buyer you will be dealing with has experience in buying and selling many different kinds of notes including structured settlements, lottery winnings, insurance lawsuit settlements, land contracts and even maybe accounts receivables from small businesses. The key to obtaining the best price for your note is dealing with a professional note buyer that has the knowledge to get you the best price you can possibly get for your owner carried mortgage note.

Seller Financed Mortgage Buyers - The Market Is There!

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Marketing Your Cash Flow Business To The Right Prospects

When the housing market becomes weak as it is currently, credit tightens and available money from lending institutions becomes almost non-existent for those with less than perfect credit. This becomes a double-edged sword, affecting both buyers and sellers. Individuals hoping to purchase a house can’t and sellers holding property are unable to sell. Fortunately, sellers often become the bank themselves and finance the deal directly with the buyer. This often is the case when the country experience and economic downturn.

Property owners employ and offer seller financing to increase the market to a wider array of possible buyers. Bypassing the lending institutions allows both seller and buyer to work an agreement which is beneficial to both based on their terms. However, you may be asking what does this have to do with the cash flow notes business? EVERYTHING!
Seller financed mortgage buyers love owner carry back notes. Because of the downturn in the economy, owner carry back financing is at high offering the savvy cash notes buyer plenty of opportunity to profit.

Remember, people that offer seller financed mortgages are just like you, the note investor. They want steady income coming in every month. However, they also sometimes want to free up their cash and invest elsewhere or simply want to get their cash in lump sum and move on, and forget the worries of carrying a note. This is where we come in as seller financed mortgage buyers. But, always follow your guidelines when evaluating the note before choosing to make an offer.

Check the creditworthiness of the buyer and see if the payments have been made in a timely manner. Check the amount of equity the homeowner has in the house, the length of the remaining term on the seller financed mortgage. These are just a few of the guidelines you should check before making an offer. Due diligence is always necessary to avoid costly mistakes.

In a lean economy it is important that we think outside the box and become creative. Eighty percent of the cash flow notes business is marketing and building your list of contacts and potential contacts with this list of contacts including both possible notes sellers and note investors. Contact mortgage brokers and your local banks. Don’t forget title companies and of course real estate agents. All of these have access to potential leads for owner carry back note holders that may be willing to sell their mortgage note.

Seller financed mortgage buyers, get to work and follow up with your marketing protocols - the market is there!

Expanding Your Mortgage Notes Business With Defaulted Loans

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Working With Distressed Homeowners And The Bank

As a note buyer or broker, you should always be in the look-out for ways to expand your business or portfolio. Purchasing mortgage notes is great but there are many different ways to profit in the mortgage industry, you just need to think outside the box. With the amount of homes going into foreclosure as a result of the current economy, the local bank could be a valuable asset if one were to apply a little critical thinking. Your competition may or may not be already capitalizing on this untapped market.

Houses in pre-foreclosure are ripe for the picking if you know how to go grasps this low hanging fruit. However, this approach does take a bit of specialization on your part in the fact you must approach the homeowner that is default and the bank holding the mortgage. It can be difficult to locate a homeowner who already is facing one of the worst episodes they can possibly face - the loss of their home. But, you as a potential buyer have a solution that can help remove some of the stigma of foreclosure. Avoidance of foreclosure for the homeowner and assisting them in ever having to deal with a foreclosure on their credit report.

It should be noted that the window of opportunity is time sensitive for pre-foreclosure mortgage note buying. The time between default and foreclosure is short so working fast is important. Since the nature of the issue is fragile, it is best to first try to contact the homeowner by mail. If contact is not forthcoming, then a phone call or direct approach may be necessary however, it is best to attempt contacting the homeowner through mail first.

Once you have contacted the homeowner it is important to get them to agree you are buying the house from them while you negotiate with the bank holding the mortgage. You don’t want the homeowner selling the house to someone else while you are in bank negotiations.

After an agreement has been reached between you and the homeowner, you should then approach the bank. First and foremost the bank does not want o foreclose on the homeowner and take a loss on the mortgage note. However, at this point they really do not have a choice but to foreclose on the property owner and put the house on the auction block where they will surely take a substantial loss.

Drop by the bank or make an appointment to see the loan officer and make it very clear what you are offering. The proper term within the industry is a short sell. Simply put, you are making an offer on the mortgage to buy it from the bank at a reduced price. In many cases they will be more then willing to accept your offer. However, we want to add investment to our portfolio and add cash flow notes to our monthly income streams.

At this stage, you make an offer to effectively become the bank and offer to buy the note itself from the bank at a reduced price. Everybody is a winner! You and the bank because you have added another valuable asset to your property or as a broker, you have negotiated a deal to offer your list of investors. The homeowner can win as well. Although they will lose their home, they can avoid the stigma of foreclosure with a Deed in Lieu of Foreclosure which we will discuss in another article here on the Cash Flow Notes Blog.

Pre-Foreclosure Investing - A Market To Consider As A Investor

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Is There Anything Good About Foreclosure?

Investors that specialize in buying existing notes to enhance and grow their monthly cash flow streams might consider a market which sadly, is booming - the foreclosure market. When one market is booming, another market is created. In this case and one you may have interest in is, pre-foreclosure investing. It was announced in May 2010 that a record high of bank repossessions was reached. A staggering 93,777 properties were taken back from homeowners in May, up one-percent from the previous month, April, and up 44% for the same time period last year. However, as gloomy as it may be, there is money to be made as a note investor and possible salvation for some homeowners sitting in the sites of their mortgage holder.

Avoiding a foreclosure can help save the credit rating of homeowners. In this case, although they will lose their home, they can avoid the mark of foreclosure on their credit report if a savvy investor chooses to buy up the property before the evil banker swoops in like a bird of prey and sinks their talons into the homeowners exposed credit rating.

Pre-foreclosure investing is specialized to be sure but also lucrative with discounts as high as thirty percent off market value being obtainable. But first, we need to understand the basics of a foreclosure. Banks and other financial institutions really don’t want to foreclose on property owners, contrary to popular opinion. It’s a loss for them plain and simple. However, since the economy is in shambles, homeowners can’t keep up with their payments, falling further behind each month until the bank has no choice but to foreclose and take the property back.

What this means for you as an investor is money! Banks don’t want these foreclosed properties on their books and are willing to unload them at auction. With pre-foreclosure investing there is short window of opportunity for an investor to take advantage of the opportunity. Once the homeowner defaults on their loan, the clock begins to tick toward repossession which is the ideal time for the investor to make his play.

Fortunately for you as an investor, foreclosures are frequent and rather easily to find given the amount of services available that monitor foreclosures on a day to day basis, listing them each day. If you decide to enter the pre-foreclosure investing market, you need to monitor these publications daily. Once you find a property of interest, the first order of business is to contact the homeowner and make an offer for them to sell you the property.

This may be the most difficult part of the whole process - making contact with the homeowner. Once you make contact, it can be difficult to deal with people that don’t understand the real estate industry on top of the fact they are already stressed and overwhelmed because they are losing their home. However, at this point they have probably accepted the reality of the situation and with you, the investor, offering them the opportunity of avoiding a foreclosure mark on their credit report can make you the hero.
Another thing to consider, you may need to approach and negotiate with any lien holders which they may have placed on the property.

Whatever the case, pre-foreclosure investing in a booming market with readily available profits is nothing more than another income stream for you as cash flow note investor to increase your portfolio.

Notes Cash Flow Income Streams - Unraveling The Mystery

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Understanding Notes Cash Flow Income Streams

If you pause and take a few seconds and consider the amount of monetary transactions which take place daily it will boggle the mind. Transactions take place everyday in various forms. A transaction is more than likely taking place at this very second down the street at the local market or gas station. Your next door neighbor may even be involved in a transaction purchasing an item over the Internet. The point being: Some type of transaction is taking place every second of everyday all around the world where goods or services are transferred in exchange for money or something of value to an individual or society as a whole.

This has taken place since the beginning of man and the introduction of the barter system. However, transactions serve different purposes. At the corner market, a transactions takes place between a customer buying an item and the merchant. The merchant receives the item or product from a vendor at which time the merchant marks up the item to make a profit. The difference between what he paid the vendor or supplier and what he sells the product to the customer for is the merchant’s profit, less any additional cost incurred by the merchant. Other cost could include the stock boy he had to pay to place the item on the shelf, electricity, the lease on the building, etc. All these additional cost are factored into each an every item in the merchant’s store to balance out and provide the merchant with a profit at the end of the sales cycle.

But, there are other types of transactions other than the point of sale transaction described above and what this website is all about. This type of transaction is the installment plan. An installment plan is an agreement between two parties, buyer and seller, where the buyer agrees to pay the seller in increments or installments over a set period of time. This time period can vary widely in length on the fulfillment of the agreement, in most cases years. However, the payment schedule is usually based around the thirty day or monthly cycle. The buyer agrees to pay the seller an agreed upon amount set in a contract every 30 days until which time the agreement or contract is fulfilled. This monthly payment is called a note.

New installment plan transactions take place everyday between various parties. Homebuyers and financial institutions. Car dealers and car buyers. Furniture stores and furniture buyers. Vendors and businesses. Even gyms and people buying gym memberships. What many people are not aware of is there is an entire underlying industry that exist where investors buy these installment plans at a discount and in return pay the original seller a lump sum of cash. The investor, in most cases, owns a number of these in his portfolio creating what is called notes cash flow income streams.

When the notes investors buys his first note, he has created an income stream. Each month when the original buyer pays on the installment plan, it now goes directly to the investor rather than the original seller. Notes are bought and sold between original sellers and investors or between note investors all the time. You may be asking yourself, “ Why would the original seller be willing to sell the note to someone else for less than the original value of the transaction?”

The value of the transaction is tied up within the contract between the original seller and the buyer. In effect, the original seller’s money is in many cases tied up for years. It could be decades before the seller sees all of his money. Sometimes the seller does not want to wait years for his money for various reasons which are too numerous to attempt to name. If he decides he doesn’t want wait for his money, he can approach a note broker or a note investor and offer up the transaction for sale.

The reason he must sale the note at a discount is the note investor will be assuming all the risk involved with carrying the note as well as tying up his money for years. The benefit for both parties, the original seller and the note investor, is the seller frees up a discounted amount of cash he had tied up in the contract and the note investor added another notes cash flow income stream to his portfolio. Successful notes investors can and have created monthly income streams of thousands of dollars. Passive income that comes in every month while he pursues other cash flow notes or whatever he chooses to do with his time.

The cash flow notes business is a lucrative business for note investors and can be for note brokers as well. For those willing to apply hard work, discipline, dedication and willing to spend about eighty percent of their time marketing for notes, success is almost a given for creating notes cash flow income streams.

Seller Financing - Benefiting Both Ends Of The Mortgage Industry

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Solutions And Opportunity With Seller Financing

Whether you are a home buyer or a note broker one of the great aspects of this industry is seller financing. However, let’s cover first things first and explain how seller financing can benefit both a home buyer on one end of the equation and a note investor at the other end.

People that have less than perfect credit know the possibility of acquiring a home mortgage through conventional methods, mainly banks and other financial institutions, is not very good. In fact it is almost impossible, especially in the current economy. Becoming a home owner can seem like an unobtainable dream for many. Financial institutions, for the most part, will only do business with people that have good credit ratings. It all comes down to an individuals number, your credit score. If you’ve ever felt as if you have been reduced to a number, applying for a mortgage is one area where you ARE reduced a number.

Making the effort to improve you credit score is always a good idea and should be an important goal. However, purchasing a home will become a secondary goal and depending on your circumstances and your timeline for purchasing a home, this may not be an option. There is an another option which offers an alternative to doing business with financial institutions - seller financing.

Seller financing or owner will carry is common is probably the only solution for people no established or bad credit. This option is also available to people with no savings to speak of or jobs that are low paying. By seeking out real estate property owners that own multiple rental houses, you may be able work out a seller financing agreement. Very often, property owners with rental properties have grown weary of the rental business and may welcome an opportunity to still collect a monthly note but from someone that is buying rather than renting the property from them. It is a win-win situation for both parties. The person with bad credit or low paying job gets to own a home and the seller still has a cash flow stream coming in on a monthly basis.

On the other side of the equation in terms of seller financing, there is also opportunity for note investors and note brokers to potentially gain a new prospect. Individuals holding owner will carry mortgages many times would welcome the idea of freeing up the cash they have tied up in the property. Lump sum cash is a powerful motivator to many seller financing note holders, even at a discount. If you happen to be a note broker or a cash flow notes investor, these individuals offer an opportunity for you to make some money and add another income stream to your portfolio.

Seller financing is one of the exceptional features of the cash flow notes business as well as the home buying market by providing both opportunity and benefits to a wide variety of individuals. Home buying solutions for those with very little financial means and portfolio growth for note investors as well as commissions for note brokers.

Becoming A Land Contract Buyer To Reap Hefty Rewards

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The Money Is In The Land

Although the financial industry is by far the worst hit sector because of the current economic crisis, a savvy land contract buyer can do very well in these tough financial times. In the cash flow notes business, many people only consider the act of finding note sellers and hooking them up with potential note investors and collecting a middleman fee on the transaction as the major part of the business - this is brokering notes. However, if you have cash, you can become one of many land contract buyers whom have reaped hefty rewards during this economic turmoil

What is a land contract buyer and what do they have to do with the cash flow notes business. The note buying and selling business can be looked at from both sides of the transaction, the selling side and the buying side, since both intend to make money on the deal. Land contract buyers are primarily investors that invest in land. Land can be defined as property which has a dwelling or building located on the property or land which is just that - land, with nothing built on the property.

Property is at an all time low due to the financial crisis which has caused property values to plummet, making this a prime for land contract buyers to swoop in a pick up land for sale. The reasons can vary as to why the owner of the property wishes to sell, ranging from financial stress or another investors looking unload a property and turn it into a monthly income stream. Traditionally with land contracts, the middleman is eliminated and the transaction takes place between the buyer and seller, further lowering added cost associated with closing and the sales process. The seller actually holds the title on the property, eliminating the need for a mortgage company and reducing cost.

The seller will hold the title of the property and the land contract will become an income stream for them since payments are made on a monthly installment basis, in essence, a cash flow note for the seller. A buyer or investor that purchase property via a land contract can benefit since third party fees are removed. For those of you holding property and considering selling them to land contract buyers, there is another benefit you should be aware of…the contract can be structured how you wish. The traditional down payment for property which in many cases eliminates many candidates form purchasing property can be removed allowing you as the seller to ask for a higher selling price, which allows you to make more money in the long run by removing added cost when using a land contract as the instrument for the sale.

The guidelines of a this type of land contract is a simple agreement where the seller holds the title until all monthly installments are paid at which point the seller transfers the legal title of the land to the buyer. During the term if the installment agreement, the seller agrees to allow the buyer full access to the property. If for some reason the buyer defaults on the land contract, the seller has the right to re-posses the property.

Although higher asking prices can be had, the current financial economic crises favors the land contract buyer since there are so many distressed properties available. We will cover how to finding motivated sellers and buy a land contract from the in a future article here in the cash flow notes blog at a later date.