Notes Cash Flow Income Streams - Unraveling The Mystery

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.

Cash Flow Note Buying And Selling

A Summary Of The Notes Business

`````````````````````````````````````````````````````````````````````````````
With the state of the economy and the dire straits in which many individuals and families are finding themselves, many people are searching out ways to increase their monthly income and one choice is the cash flow notes. There are many people that have been awarded judgments in malpractice suits or insurance settlements due to a car accident or some other form of injury at no fault of their own with money from the awarded judgment coming in each month.

However, very often this awarded cash flow note is spread out over many years and does not provide enough income to meet monthly bills or other unexpected expenses. Wouldn’t it be great if the bulk of these awarded judgments be collected all at once? You could payoff medical bills or other pressing bills that are causing stress in your life and reduce the amount of worry that is associated with a stagnant economy.

Others have a monthly cash flow notes in the form of a lottery winnings that are paid out over many years. In some cases this is an excellent choice for lottery winners since statistics show that lottery winners given a lump sum payment of winnings very often end up broke and in debt. However, if you are a lottery winner and have the discipline to control spending and invest wisely, selling your monthly cash flow note may be a wise option.

Another group of people that can benefit from selling a cash flow note are mortgage note holders. There are many people that have real estate holdings either in private residential property (houses) or commercial property (buildings) that could benefit immensely by freeing up cash that could be invested elsewhere to increase profitability.

Pit Falls Of Cash Flow Note Selling

Although people that have a structured settlement that provides them with a monthly income, some people are not candidates to sell their note. It should be emphasized that when selling a cash flow note that the seller will not receive the entire amount of the original balance. Note buyers offer lump sum payouts for cash flow notes at a reduced amount, usually around 80% or lower of the sum total. Note sellers will receive a lump sum at the discount but for people that are undisciplined in financial matters will very often find themselves in financial distress once they blow through the lump some paid out.

Although the initial cash flow note settlement is not enough to make a significant impact on monthly bills, the note holder will still have this money coming in each month. Before selling your structured settlement, careful consideration should be given to the possible financial implications once the note is sold and the lump sum payout is spent.

The Best Reason For Selling Your Cash Flow Note

People that are schooled in financial matters that have a cash flow note are the best candidates for selling a note that is currently in place. These people usually have cash flow notes generating income from real estate holdings and usually sell a note to free up cash for other investments to increase their monthly cash flow.

Other candidates include structured settlement holders that need to sell their settlement in order to meet obligations such as emergency medical situations or to avoid foreclosure on their homes. Another acceptable selling situation would be in order to pay for a child’s education once all other forms of funding have been exhausted.

Selling a structured settlement, lottery winnings, annuity payments or real estate notes can be profitable for the note holder, but careful consideration should be given to the financial health of the seller once the sale is final. Many times note sellers regret selling their cash flow notes because they have not taken the time to do the proper research to make an informed financial decision.