About Cash Flow Note Brokering

Note Broker / Cash Flow Consultant

The brokering of Discount Notes and what are termed "Cash Flows" is a subset of the attractive professional note investing industry.  While most who become involved in this industry focus on investing in notes (and in particular, mortgage notes) for high-yield returns, there is a popular related industry of brokers or "finders" who seek out notes for note investors and in return, earn a finders fee or commission.

Note Investors

Note investors use their own savings or capital they have raised to purchase consumer paper.  This can be anything from buy-here pay here auto paper to rent to own furniture.  By far, however, the most popular product area is residential owner financed mortgage notes due to its exceptional collateral.  All such note investing is considered sub-prime since it usual involves an owner who could not qualify for a traditional mortgage offered through a bank or similar institution.

Note investors most often will "discount" their purchases.  This means that a note originated at say 8%, will be purchased at less than its remaining face value to yield 10%, 12% or even higher.  It is not unusual for investors to purchase smaller notes, such as notes collateralized by a mobile home, to yield 18% or higher.  Note investors are experts in the use of a financial calculator capable of solving Time Value of Money problems. More on mortgage note investing.

Note Brokers

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.

Brokering "Cash Flows"

While true note investors focus almost entirely on the investment side of real estate notes, note brokers almost always expand their brokering options to include what are termed "cash flows".  A cash flow is really just any contractual obligation (usually consumer-based) that pays out a monthly or periodic payment (interest, fee, principal, etc.) or in other words, it "cash flows".   These other cash flows are often in the form of:

  • ANNUITIES:  such as those associated with structured settlements, lottery or gaming awards, investments, etc.
  • INHERITANCES:  advances against a proven, liquid inheritance tied up in probate.
  • LEGAL SETTLEMENTS:  cash advances against anticipated court awards as a result of a wrongful death, medical malpractice, product liability or similar lawsuit.
  • PERSONAL ASSETS:  advances of cash on luxury personal assets often destined for auction at a future date.
  • BUSINESS NOTES:  notes generated from the sale of a business where the seller agrees to hold a note for some monetary portion of the sale.
  • LIFE SETTLEMENTS:  the purchase of a life insurance policy, usually on a senior citizen 65 or older, at a price higher than the policy's cash value but less than its death benefit.
  • ACCOUNTS RECEIVABLE FACTORING:  often lumped in with the cash flow industry because it is a discount transaction, this is really a separate field all to its own.  Factoring is a method of raising cash used by many business owners.  This is a very large industry that uses very professional brokers.  Many cash flow brokers, however make the transition into factoring, adding this as a second profession.

Success in Discount Notes and Cash Flows

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.  

Affiliate Marketing and This Enterprise

Because of the enormity of the various product areas found in the Cash flow Industry, affiliate marketing is playing a larger and larger role in productivity.  In fact, for many brokers affiliate marketing is one of their primary sources of revenue. 

Expanding Opportunities

Of all the various enterprises available as business opportunities, few can compare when it comes expanding the note business into other opportunities.  Since discount notes are basically a real estate product, practitioners in this vocation have the opportunity to expand their business into such areas as...

  • Real Estate Wholesaling
  • Lease Option Investing
  • Mobile Home Investing
  • Fix and Flip Opportunities

Quality Training and Note Broker Support at DataMax

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.

For its note broker / note investor website subscribers, DataMax provides a complimentary support program that will greatly enhance any broker's knowldedge.  The DataMax note support area is now accessed through this site in the note broker support area.