Cash Flow Notes Business Opportunities
Consider a real estate investment project that costs $100,000 to build. The current yield of U.S. government bonds is 3 percent. You add 1 to obtain a time value of money of 4 percent. In the first four years, you estimate that the development will bring in $20,000, $30,000, $30,000 and $40,000 of rent. Converting 4 percent to a decimal and adding 1 gives 1.04. Dividing negative $100,000 by 1.04 gives a DCF of negative $96,153.85 in the first year. Dividing $20,000 by 1.04^2 gives a DCF of $18,491.12 in the second year. Dividing $30,000 by 1.04^3 gives a DCF of $26,669.89 in the third year. Dividing $30,000 by 1.04^4 gives a DCF of $25,644.13, and dividing $40,000 by 1.04^5 gives a DCF of $32,877.08. Adding up all DCFs in each period gives a discounted present value of $7,528.37 for the first five years. After comparing with the discounted present value of another project, you find that the real estate investment project is your most viable business option.
The Funder or Buyer of a cash flow has the ability to invest money for a longer term with a good return. A Funder might be a private individual or a large investing company. In either case, the cash flow is typically purchased at a slight discount – thereby giving the investor an attractive yield.
Cash Flow Notes Business
People are always looking to get fast cash for their notes. That’s why as a NoteInvestors Cash Flow Specialist, you will always have access to unlimited funds. NoteInvestors provides all its Network Members direct access to investors (funders) who will provide the cash to close your deals, do all the paperwork and pay you your fees. We’ll provide you with the forms you need, and also help you work with them. And best yet, NoteInvestors never charges a fee, which means you keep everything you earn.
The contract or transaction of cash flow notes are private in nature and do not involve recognized financial institutions such as banks or credit unions. Cash flow notes are nevertheless legal payment contracts, representing a loan between two private parties. They are negotiable instruments, representing the promise of payment.
Cash flow notes can be sold or purchased and they are similar to IOUs. In the real estate industry, this is usually used by most investors so that they can collect lump sum payments. It is possible to make money with these notes because it involves fewer risks. If you decide to invest in selling the notes, here are some tips for you:
Cash Flow Notes For Sale
The person holding the cash flow note has the option of selling his or her notes to a third party, usually at a discount, and obtaining up-front cash, allowing the purchaser to collect the cash flows that result from the note. The discount is negotiable and depends on factors such as how urgently the seller wants up-front cash, the soundness of the security that covers the cash flow note, the credibility of the note issuer and more. Normally, cash flow discounts range anywhere between 10 and 60 percent of the note value.
What Are Cash Flow Notes
The cash flow industry grew rapidly in last 20 years largely due to a healthy and growing cash flow consulting market. Consultants or cash flow brokers are able to help sellers “shop” deals to the best financial funders – oftentimes with preferred access or special pricing. Think of the consultant as a “financial matchmaker.” Paring the seller’s cash flow with the best possible Funder for both price and performance.
The key consideration is to ensure that the contract or the cash flow promissory note and the accompanying mortgage or paperwork related to the security conforms with the relevant state laws. This usually requires the services of an attorney.
Rather than investing in mortgages, note brokers use various marketing methods to seek out holders of mortgage notes that need to raise cash for various reasons and are willing to sell their high-yield notes to do so. In their valuable role as "finders", note brokers usually align themselves with one or two institutional note buyers who will pay a "finder's fee" for quality referrals that result in a successful note purchase.
Cash Flow Statement Notes
If you are an entrepreneur and are considering a new business that does not involve investment projects, your business opportunity assessment is a little more complex and depends entirely on the nature of your new company. Specifics to consider include competition, location, startup costs, the costs of running the business, the current market for your products and sources of funding. While a small, family-owned convenience store must worry about new competitors moving into the area, an internet-based company must worry more about marketing and creating a search engine presence. While a recruitment consultancy may have little in startup costs, it will only thrive if the manager has a good network of business connections. Alternatively, a successful car company will have high startup costs and be well positioned in the supply chain of raw materials.
Your Marketing Tool Kit binder contains a wealth of information and proven ready-to-use marketing materials to quickly get you up and running.Your “Get Started Orientation” provides an easy-to-follow, step-by-step plan that provides a solid foundation for your success. You will also find samples of professionally prepared marketing flyers, direct mail letters, directions on how to prepare your marketing materials, Social Media marketing resources (included on Vol 2) and samples of all the forms you’ll need to seamlessly work with the funders. And last, but not least, a powerful Jump-start Marketing Plan that delivers big results for small budgets. In short, everything you’ll need to start and run your business.
The sale process of cash flow notes can be simple or complex depending on the type of cash flow. The sale of ordinary cash flow notes require only an agreement that reassigns ownership, whereas sale of high-value cash flow notes involving real estate might require opening an escrow account.
Without question, note investing and note brokering are exceptional (and popular) vocations. From a cash investment standpoint, they are at opposite ends of the spectrum. Note investing requires capital and lots of it. Note brokering is probably one of the least expensive entrepreneurial enterprises to launch. It is very, very networking intensive but requires little in the way of other expenses. In fact, if you are very active with social media and online networking, you can be in the industry as a finder, operating at full throttle, for less than $20-$50 per month.
Successful note brokers (finders) spend endless hours building relationships that can lead to referrals. The larger your network, the more referrals will come your way. It takes time and persistence, however, to develop these relationships and the most problem most common among those that enter the industry is they lack the ability to stick with it.
Cash Flow Notes Training
Quality training in notes and cash flows is difficult to obtain at what could be termed reasonable prices. This is a very specialized industry and requires specialized knowledge. It is not unusual for recognized industry training companies such as Rich Dad Education to charge upwards of $5,000 for specific "live" industry training classes and roughly half that for extensive "On-Demand". There are exceptions to that rule, however, with note investment companies such as Charter Financial of Houston, TX, offering a relatively high quality training program for just two to three hundred dollars.
Contrary to the management consulting agency, a teddy-bear factory is capital-intense, as you require machinery to give you an efficient use of time and resources. Opposed to business networks and people talent, your key to success is finding the right types of machinery at a competitive price and positioning yourself at an ideal location on the supply-chain network. The latter gives you cost advantages for materials. Cost-effective labor further brings down manufacturing costs. A good sales acumen helps you get your products into the stores.
Good negotiating skills are critical to the success of every business. In Volume 3, “Power Negotiating,” a nationally recognized note/cash flow expert reveals the most effective negotiating techniques used by the industry’s top earners. This indispensable program will show you how to sharpen your skills to get the best deals — the ones where all parties are satisfied.