Monday, May 11, 2009

Cash Flow Notes ….. The Beginning.

I’ve been in the cash flow note business for so long it’s hard for me to remember the beginning. How simple the business concept and model really is. Now to write about it brings me back to early days when I first began investing.

Once upon a time there was a handsome man named Cash Flow. He was a hard worker and lived a typical American suburban life. He went to work every day raised 3 kids and a couple of dogs. Kept his nose to the grind stone and prospered with the American dream.  As age crept into his life, he heard of stories of a place of orange juice and sunshine, of leisure time and suits.  This was a place he had to go. He called a realtor to put his home on the market and was crushed by the laughter on the other ended of the phone. “Sell your house now!” the realtor chuckled. “Don’t you read the papers Mr. Flow? The market is in the tank. I couldn’t give your house away. And if I, with all my expertise could get a buyer there isn’t a bank in the land that is lending money. Sell your house….hahahahaha…” as the nasty realtor hung up.

So what’s a bright hard working American homeowner to do? Why.. Carry the paper himself! Sell his home to a fine young credit worthy couple and let them make the monthly to him. Cash Flow will be the bank.

As you might expect our hero sold his home and moved to the enchanted land of Florida. Everything was going great. The sun was warm the OJ sweet, life was good. Then one dark over cast nasty day a horrible affliction called inflation over took the land. Things that used to cost one dollar now costs two. The price of OJ skyrocketed and our hero realized the monthly payment he was receiving form that lovely couple wasn’t enough to live on with this thing called inflation lurking around every corner.

 Then just when all seemed lost, Cash ran into an old friend. They got to talking and our hero remarked about his troubles. His old friend told him he didn’t need to wait and collect what was owed to him in monthly payments he could sell his note for a lump sum payment today. Thus the cash flow note business was created and everyone lived happily ever after.

That my friend is the cash flow business in a nutshell, whether it’s seller financed mortgages, account receivables, lottery winning , court case settlements. Whenever someone has an instrument that pays a set amount over time there can be an immediate desire or need to cash that in for a lump sum payment. Bada bing that’s the deal.

Oops… I almost forgot. There can also be a need for a middle man, someone that brings the buyers and sellers together and gets paid for his/her services. The opportunities to profit from the cash flow note business are truly unlimited.


1 comment:

  1. Lisa,
    How do I get started in brokering notes?
    I love your blog post. This is a cute way of writing it.