Sunday, July 5, 2009

Winning Cash Flow Notes Bussiness

Most Investors think winning in the cash flow notes business consists of discounting privately held mortgage notes and factoring. The Guru’s you see on television will tell you about the other income streams but by and large, it’s nothing but filler in their educational material to justify charging you for their super fantastic cash flow notes course. They would look pretty silly charging you three grand, telling you the business consists of finding people that are receiving a monthly income from a real estate note they took back when they sold their home and you need to either find the people that have a need for immediate cash or talk them into believing they are better off by selling their cash flow note to you at a discount. But guess what kids? That’s what the business is! It’s that simple! The hard part of winning in the cash flow notes business is finding the deals.

Look you can spend days on end down at the county mortgage recorder’s office. Sit at a computer and copy all the information, to your heart’s content of sellers that participated in the financing end of the sale of their home. You can have the perfect letter to send that guy or have the 100,000 dollar telephone talk off. But what do you really think happens when you contact what the guru’s call Mr. Desperate note holder.

1. The phone gets hung up in your ear or he never opens you envelope. Either way you just expended considerable effort and expense to be totally blown off. This isn’t necessarily a bad thing. You are playing a numbers game, kissing a lot of frogs, looking for that diamond in the ruff, the needle in the hay stack. So when you got that NO you are really one step closer to Yes. And the money you can make when you hear yes will more than pay for all those no’s. It’s just the odds in the numbers. The more people you talk to the closer you get to what you want. You are closer to winning in the cash flow notes business but any wya you slice it no is still no. And that’s not what you want to hear.

2. Mr. Desperate note holder is interested, but why should he discount his note to you. He’s happy with what he has. So tell me, what is the response the guru’s have laid out for you, your spiel about the risk that the buyer may default, the uncertainty of what may happen? Do you really think he doesn’t know these things? And if he didn’t know them when he assisted in the financing of his home, he has certainly learned by now. You don’t actually think you were the only person to approach him. How many people have access to the mortgage recorder’s office? It’s open to the public! How many people were sold that same crappy Make Money with Cash Flow Notes Course? Think about that. Now consider the professionals that were involved in the sale of Mr. Desperate’s home. The realtor, the title company, the title attorney and title company employees, people with friends in the recorder’s office, the sellers accountant that gave the green light to the deal. Then consider the people that make a living 24/7 in the cash flow notes business. This is their lively hood that puts food on the table and pays the mortgage. Are you starting to see how far down the food chain you are! The task you have in front of you! Does winning with cash flow notes look easy from this perspective?

3.) Mr. Desperate is ready to deal and is so happy you came along he will name his first born son after you. Great! Getting a note is the most difficult aspect of the business. And where you need to devote 90% of you time. If you can finance the purchase yourself you need to understand how to arrive at a profitable price for what you are buying, there is nothing particularly difficult about that. If you intend to broker off the deal pay attention, it’s time to watch out for the sharks. I’ve never been ripped off when I’ve brokered a cash flow note deal. But I see horror stories every day. Situations where you bring a deal to an investor and are completely cut out on you fee or priced yourself so ridiculously low you made $1,500 and the investor skinned off another $8,500 that would have been yours. It happens every day. My advice to you is find a couple of companies you are comfortable doing business with and develop a good relationship and if you feel you are ever being taken advantage run. While I’ve never been cheated in the cash flow notes business. I’ll relay a story to make my point.

Some years ago I was part owner in a mortgage company. We went after the refinance boom that was a money maker at the time. I had a partner that was a bit of a soaker. Meaning he liked to squeeze ever penny out a deal and more. He could and often times would bite off his nose to spite his face. Anyway, we where refinancing three multifamily residential mortgages, for an investor that needed to do a stated product and placed it with what was probably at the time the largest mortgage investor in the country and the only one that had a stated loan. What you need to understand about brokering mortgages is that once you put a deal before an investor you have priority with that deal. If you borrower goes to another broker and tries to run a deal past an investor that already has that borrower and deal in front of them that investor should refuse to look at it. The other broker needs to take the deal someplace else to another investor. In our situation there was no other place for this other broker to take his deal. As there was no other investor that could do the stated deal the borrower needed. Well you can imagine my anger when my investor informed me that they were going to do the deal with the other broker and they hoped I understood that the borrower felt more comfortable with my competitor. Suffice it to say I never did business with that investor again and took great delight when they collapsed in a flame of glory with the mortgage meltdown. What scum they were. The point is finding a couple of cash flow investors you work well with and keep an eye on them.

Below I compiled a list of the many income streams that make up the cash flow notes business. I haven’t done this to produce some academic exercise or to satisfy a need I have for never doing it in all the years I’ve been in the cash flow business. No, I’ve listed the cash flow streams so you can look at all the opportunities that are out there.

If you are going to be winner in the cash flow notes business, you are going to have to find that thing that works for you. If you’re present life circumstances revolve around retail sales and what that enterprise entails you would look pretty silly trying to broker Aerospace leases. What’s your connection, you’re”in” to the aerospace industry, or tax liens and deeds? You don't have one! But maybe, for the last 10 years you have managed a department store. So you are familiar with cash flow realities involving commercial contracts, leases, and purchase orders, accounts receivables. Why in the world would you be looking at residential real estate notes? Because you bought a winning with cash flow notes course off a late night infomercial and they can’t see beyond factoring and promissory notes. Do you see where I am going with this? Take a look at your experiences and connections and use that in building you winning cash flow notes business.

Business Based Streams of Income

1.) Accounts receivables

2.) Aerospace leases

3.) Bankruptcy Chapter 11 reorganization plans

4.) Bankruptcy receivables

5.) Commercial contracts

6.) Commercial deficiency portfolios

7.) Commercial leases

8.) Construction receivables

9.) Equipment leases

10.) Equipment timeshares

11.) Letters of credit

12.) Medical receivables

13.) Partnership agreements

14.) Purchase orders

15.) Sports contracts

16.) Trade acceptance drafts

17.) Vendors carry back paper

18.) Warehouse inventory lines

Collateral Based Streams of Income

19.) Aerospace notes

20.) Car notes

21.) Collectibles notes

22.) Equipment note

23.) Homeowner association/ Condo assessments

24.) Maritime notes

25.) Mobile home, RV, Motor home notes

26.) Private Mortgage note

27.) Tax liens and deeds

Consumer Based Streams of Income

28.) Cemetery burial contracts

29.) Certificates of deposits

30.) Consumer contracts

31.) Credit card charge offs

32.) Delinquent debts

33.) Health and Country club memberships

34.) Inheritance

35.) Trust advances

36.) License impound

37.) Retail installment agreements

38.) Student loans

39.) Timeshare memberships

Contingency Based Streams of Income

40.) Commercial judgments

41.) Commissions

43.) Consumer judgments

44.) Corporate charitable contributions

45.) Franchise fees

46.) License fees

47.) Royalty payments

48.) Sales revenue


49.) Farm Contracts

50.) Lottery winnings

51.) Tax refunds

Insurance Based Streams of Income

52.) Annuity

53.) Casino winnings

54.) Corporate retirement plans

55.) Funeral purchase assignments

56.) Prizes and awards

57.) Structured settlement and class action awards

58.) Viatical settlements

Well no matter how you found this blog I hope it has given you some insight into the cash flow business and investing. More than anything I want to get you away from the cookie cutter mentality that the late night infomercial guru’s sell. It’s a great business with loads of opportunity that cries out for innovation and risk. But winning in the cash flow notes business isn’t really difficult. It takes imagination, dedication, knowledge and hustle.

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