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Friday, December 23, 2011

Watch out for this SCAM


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The competition for "cash flow notes" is fierce. That's a good thing.  In my experience, any time you have heavy competitive the money is often lucrative.
Think about iPhone apps, SEO, security software, carpet cleaning, window washing, car rentals, and handyman repairs. These can be very lucrative even in a sluggish economy.  But there's a right way and a "hard way" to do things. 
The note market much larger today than it was five or six years.  This is partly due to the economy and the collapse of the real estate market. Cash flow notes thrive in this environment because people are forced to get money fast.
Cash Flow Notes in All Its Glory
Most of the time, people on the inside track always land the best notes.  These insiders are usually: 1. seasoned note investors 2. Bankers 3. Real estate lawyers (and judges)
I'll show you a short cut and how to find the best cash flow notes.  You'll also need to find qualified buyers or sellers.  There are only a couple of things you need to know to be successful in this market.
What is a cash flow note?
Cash flow notes are IOUs.  They are an agreement to pay someone a specific amount of money, with interest, over a specific period of time.  The most popular cash flow notes are commercial and residential "paper" (also known as a mortgage).  There are cash flow notes available in almost every conceivable real estate investment. Most (but not all) cash flow notes are secured with a title deed.
But the neat thing is you can find cash flow notes for everything from accounts payable, structured settlements, royalties, leases, pre-construction deals, and more.  I'll focus on real estate cash flow notes in this week's issue.
Here's an example of a simple cash flow note...
The Johnsons sell their $250,000 home with owner financing.
The Johnsons ask for $25,000 down and finance the balance of $225,000 at 10 percent interest. The Johnsons receive monthly payments on this "note" until it's paid off.  That's where the "cash flow" part comes in.
An entrepreneur calls the Johnsons and offers them $220,000 for the note on their home. The Johnsons agree. The entrepreneur buys the note and resells it to another buyer who is willing to pay $225,000 for it.
The first entrepreneur keeps the $5,000 difference and the Johnsons get $220,000.  This process is contingent upon locating note sellers and brokering a deal for each note to willing buyers.
In the real world...which is how I look at business opportunities... it takes a lot of time, energy, and money to build a network of qualified cash flow note sellers and buyers.  But entrepreneurs are making money in this business.
What's more, there's an established network of entrepreneurs already doing these deals... they're called bankers, lawyers, judges and real estate investors!
Little-Known Cash Flow Secret
One secret to "winning" in the cash flow business is target marketing. Who would've guessed direct marketing is a key?  But it's logical. You need to find and reach qualified cash note sellers.
Cash note sellers are typically home owners, business owners, and other real estate investors who have provided financing to buyers.  One of the best ways to reach a large targeted audience quickly (if you don't have an established in-house list of contacts) is with TV.

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