Note Brokers and note buyers buy notes, mortgages and other types of cash flows for a lump sum of cash. Because cash now is worth more than a series of small payments, the note broker will buy that cash flow for a discount from the face value of the note. For example, you might give $36, 000 cash today to a note holder for her $40,000 note that has 240 monthly payments. Then you would receive 240 monthly payments.
Our job is to find the holder of a note and then offer him or her a lump sum of money to assign that cash flow to us. Within that job, there are many complications, investments opportunities, possibilities for profit, and for a challenging and exciting career!
You can enter the note buying the business in several different ways:
- By learning how to buy notes from brokers. With a little training, you can become a passive, yet knowledgeable investor in deeds of trust secured by real estate. You will be able to get higher and safer yields than most we think ALL other investors.
- By finding investors and note sellers you can earn a finder’s fee for referring them to note brokers or note sellers. In other words, by actively looking for people who would like to invest at least part of their portfolio in notes secured by real estate, and then referring them to a note broker, you can earn a finder’s fee.
- By locating private party noteholders to see if they would like a lump sum of cash for their notes. You can then refer them to a friendly note broker who will pay you for your efforts.
- By developing a list of corporate institutional investors, you can sell them notes you find. They will generally do all the paperwork and will pay you a commission. In most states, you do not need a license to do this.
- You can find and buy notes for your own portfolio, sell them to private investors, reschedule them for greater profits, keep part of the note and sell part or manipulate the note in several ways to increase profits. This is the heart of the business. You will make a profit when you buy, when you broker, when you sell the notes, and when you collect the payments for your future financial independence.
This article was modified from an article originally written by Richards and posted to this site on 2006/01/27.