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

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.

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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.

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6 comments:

Alan Noblitt said...

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Interim CFO said...

That was interesting to read about the Lottery winners being able to sell their annuity's. I didn't know they could do that. I like how it is done in England, where the lottery winner gets a large lump sum. But I guess the people running the lottery don't make as much money from the accumulated interest when it is done that way.

Business Cashflow said...

It is great to read some of the information and feedback, here. I hope to read more ideas in the future!!!

Cash Flow Wealth said...

Good info on the different types of notes to own. As you say the real estate or mortgage note is probably the most commonly referred to but there are others that you can learn to cash flow from.

Mercedes Rishelle said...

Nice post! I especially liked and agreed with the mention of Suze Orman stating the benefits of a structured settlement as opposed to a lump sum. I personally believe it is a lot less pressure when you have a structured settlement because you can sell it if you need to and also the money is allotted in payments and not just given to you which will minimize over spending.

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