Beware of These Cash Flow Note Investors Pt. I

by Michele Robbins, CPA

The cash flow note business is very small.

Some of the big seminar or infomercial gurus would have you believe that is not true. They lead you to believe that there are hundreds if not thousands of investors just waiting to buy your note. This is a big fallacy that could lead you into trouble.

For example, if you really believe there are hundreds of note investors and you, as a cash flow note broker, go into processing a note with one specific investor but that investor troubles you for one reason or another, it would be easy to justify going to another investor – or ending that relationship altogether. In many cases, you can do this – but my word of caution is never burn bridges with your investors.

The hard truth of the matter is that there are NOT thousands of note buyers at your fingertips. While it is true that there probably are hundreds of note buyers, the fact is that most of them are private individuals that buy local notes…of which you will likely encounter very, very few. They do not shop websites for notes. They do not call people from advertisements. They have established relationships with those they work with and rarely will they buy a note outside of their established circles, much less from a new note broker.

But do not fear. All is not lost. There are other avenues to sell your notes!

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Where do you find the REAL cash flow note investors? Since 1992, the answer has always been:  In THE PAPER SOURCE REGISTRY OF NOTE INVESTORS. Go to
http://papersourceonline.com/registry-of-investors/how-to-get-in/
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Institutional Investors
I put cash flow note buyers into three distinct, separate groups: First are the institutional investors. They will buy notes nationwide for their own portfolio, with their own money. They may securitize and sell them on the open market later, or hold them for their own portfolio, or occasionally trade them to another institutional investor at a later point.

These buyers want you to bring them notes. They will pay you a broker fee or allow you to deduct your fee net of their quote to you. But you must know who they are. They advertise to attract you. Many times they call you to introduce themselves to you.

Beware Of These “Buyers”
Why, then doesn’t everyone know who these note buyers are? I can answer that question with one simple word: DECEPTION. The reason many brokers do not know who these buyers are is because they are constantly being deceived by others in the cash flow industry that use the same tactics to solicit you for your notes.

These ‘others’ are usually new note brokers that are trying to find notes, just like you, perhaps. They will call other note brokers and tell them they are direct note buyers. They advertise also. They shop notes posted on websites. They do all of the same things that institutional buyers do. If the new note broker believes them, then that is just another broker fee being tacked onto the deal, giving the seller less for their note, the note broker less control of the deal, and usually a big waste of time for everyone.

How do you overcome this huge obstacle? RESEARCH. Ask around. Get references. Any institutional note buyer should be happy to give you a reference to another note broker that they have purchased notes from. With a little discussion (if you know which questions to ask) you should be able to determine if your note buyer is really a buyer, or just another note broker looking for an easy deal. And always consult the PAPER SOURCE REGISTRY OF NOTE INVESTORS.

MORE TO COME…

2 thoughts on “Beware of These Cash Flow Note Investors Pt. I”

  1. William Edmondson

    I have a Note Broker Course from “Charter Financial” in Texas. Do you know if they are reputable? Thank You.

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