Cash notes for sale refer to investments secured by tangible property such as real estate or business assets. There are numerous types of cash flow notes, but the most common include business notes, real estate notes and land contracts, seller carry back mortgages and structured settlement annuities.
Cash notes for sale can make for a profitable investment product, Fake money but only if investors understand the process and engage in due diligence. Once investors purchase cash notes they can either hold the note and collect revenues or resell the notes for profit to another investor.
Business notes can be purchased to help business owners expand their operation or to provide seller carry back financing to a new owner. Several strategies exist to help business owners obtain venture capital. The most common options include factoring, purchase order funding, and seller carry back trust deeds.
Seller carry back refers to financing provided by the business owner. This strategy is used to sell the business to a new owner who cannot obtain financing through a conventional lender. Business owners act as the financier and temporarily provide all or part of the financing.
In most cases, business owners provide partial financing and the new owner obtains the balance through a bank, credit union or hard money lender. Business owners can sell all or part of the seller financed mortgage to another investor.
With factoring, business owners sell accounts receivable to a funding source or Factor. Factors can include banks, credit unions, investment groups or private investors. With purchase order funding, business owners sell upcoming purchase orders to receive advanced funds. These types of cash notes for sale are relatively risk-free as long as they are backed by creditworthy customers.
Property owners can sell real estate notes and land contracts to investors for a lump sum of cash. When partial notes are sold, note holders assign payment rights to investors, but retain ownership rights. Once advanced funds are repaid, payments revert back to the original owner.
One of the most popular real estate investment products is seller carry back mortgages. Similar to business seller carry back agreements, homeowners provide financing to buyers on a short-term basis. Seller carry back mortgages typically extend for one to three years and provide buyers with poor credit the opportunity to establish or rebuild their credit rating. Once the contract expires, buyers obtain financing through a mortgage lender.
When investing in real estate notes it is best to hire a real estate attorney to review contracts, execute seller carry back trust deeds, and file property transfers through the court.
Structured settlement cash flow notes involve assigning payment rights of forthcoming annuity payments. Annuities are guaranteed by life insurance companies. Structured settlements are established to compensate people that have been injured due to negligence of an individual or business entity. Structured settlements are also used to compensate winners of jackpot lotteries.
Annuitants can elect to sell a portion of annuity payments to obtain a lump sum of cash. Not all states allow the sale of annuities and those that do generally require Annuitants to appear in court and explain why they need to sell upcoming payments. Investors who purchase structured settlements must adhere to state laws.