Investors in cash flows find them to be high-yielding investments. Notes, also called cash flows, income streams, debt instruments or paper, are thought by many to be limited to discounted seller carryback mortgages. Today, however, the terms mean much more. Not only are smart money managers investing in and brokering discounted seller carryback mortgages, trust deeds and contracts for deed, but they buy and broker almost any other debt that is paid over time, not necessarily secured by real estate, that can be a marketable cashflow. This includes annuities, leases, insurance benefits paid in installments (called structured settlements), retirement accounts and royalties, even lottery winnings — and much more. Even such esoteric financial instruments like tax lien certificates, contractor´s liens, medical receivables and commercial accounts receivable ( factoring ) can provide multiple streams of income. In other words, today the term cash flows or cash flow notes can mean any marketable I.O.U. that represents a promise to pay over time. They are secured by something of value that can be foreclosed on or otherwise claimed by the note owner if the payments are not made.
You can make money brokering notes — using the investor’s funds, not yours — and you can make money investing in them. They are normally sold at a discount from their balance. Investors receive the payments on the notes at a yield far above bank CDs and money market funds. Others can make a nice income brokering these notes to investors.
