How To Make Money with Cash Flow Notes

Tracking finances

A cash flow note is actually an informal debt tool that constitutes a legal and binding document stating the borrower’s promise to repay the lender.  There are various types of these IOU's (also known as “Is Owed Unto” or “I Owe You”) documents.  There are trust deeds, real estate, tax certificates and a lot more.  The most popular are the mortgage or real estate notes.  Strange as it may seem, you can make money out from these promissory papers.  To learn more about how to profit from these peculiar cash deeds, here are some effective tips.

  1. The first thing you must do is find an attorney to help you create a draft copy of a broker’s contract.  It should state all the terms and conditions regarding the transaction that you and the broker are about to partake.  It is extremely important that you clearly state the broker’s fee (or finder’s fee) that you require.  Whatever amount is stated on this contract should be included in the buyer’s total charges.  Having a broker is highly recommended to avoid fraudulent dealings with clients.  Just make sure you choose a trustworthy agent. 
  2. The next step is to appraise your cash note.  If what you have is a real estate IOU, look for real estate appraisers.  This way, you will be able to determine the value of your cash flow note.  Often times, the value that will be given to you is not the same as the actual value of the note.  You have to take into consideration your remaining debt balance, interests, penalties, etc. 
  3. Promote what you have by posting ads on your local business newspapers or magazines.  It is advisable that you create your own website so that you can easily offer it to the online community. 
  4. To find sellers, try contacting banks, real estate representatives, mortgage brokers, etc.  Make sure you have your broker’s contract ready just in case they oblige.
  5. If you are the broker, find buyers by talking to different real estate agents, property investors, bank representative and the like.  It will be difficult at first but as soon as you have established yourself in this field, your reputation will grow as well giving you a higher market value. 
  6. If you are the seller, it is wise for you to sell the note in discounted price.  Remember, the purpose of this is to acquire a large amount of money in one transaction. 
  7. Make sure you are professional at all times.  Be punctual and always keep your word.

Selling cash flow notes is pretty much like selling a house or insurance.  Only this one is just a piece of paper that is worth a lot of money.  As long as you are committed and determined, you can never go wrong.  Make sure that always ask for referrals from all your existing customers.  If you can, ask for recommendations for long term business relationships.  Be consistent and you will soon win the hearts of your clients in no time.


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