Build A Cash Flow Notes Business Brokering Or Buying Discounted Notes

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.

1 comment:

Purchase structured settlements said...

This is a great ideea to become a notes broker. You just do the work of bringing together the buyer and the seller. I think this is a good potential to start which can lead to investments in mortgage sector.