Keep the Cash Flowing


A promissory note issued by the Second Bank of...
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One of the more lucrative investments available in the market now is the cash flow notes industry. It is a trade with very high potential since not so many people know about it and those who do don’t really know how to make money out of it. So what is a cash flow note? These are notes very similar to promissory notes only that the debts are termed. There are many types of notes. The most common are the real estate notes, car loan notes, business loan notes and structured settlement of lawsuits. These notes are binding and are secured by land, car, business assets and annuity loan respectively.

So how does one make money out of this trade? An investor would buy these notes for cash and in return gets the right to collect the debt from the third party that owes the notes and the buyer does so at a discounted price. So if one buys notes from a car loan for example that has sixty months worth of five hundred payments per month. So this would equal to thirty thousand at the end of the term. So if the investor can buy the notes at fifteen thousand lump sum he is set to earn another fifteen thousand at the end of sixty months. One risk with this trade though is if the third party fails to pay his obligation. So this is one thing to watch for, if the third party is a known credit risk. But the higher the risk of the third party the higher the discount the investor could demand. But even if the third party fails to pay his obligation the investor would still be covered by the collateral which is in this instance, the car. Another way to earn is to buy and sell these notes. So an investor does not to wait until the end of the term to collect everything. He can at the end of thirty months sell the notes for let’s say eight thousand, netting him a profit of eight thousand.

So you see investing in cash flow notes is not as complicated as it seems. All you need is a keen eye and available cash then your set to make a profit.


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