Last week, we talked about using cash flow notes to earn a solid return on your investment dollar. This week, I'd like to introduce you to another method of earning anywhere between 16% to 24%, or higher on your investment. Tax lien certificates can easily earn you a good, solid investment return.

Here's how tax lien certificates work. When a property owner fails to pay his/her property taxes, the unpaid taxes will eventually become delinquent. In the states which issue tax lien certificates, the unpaid taxes are included in the tax lien certificate, in addition to the penalties accrued and the interest accumulated. These states usually offer these tax lien certificates to the public at a sale or auction. When you successfully bid on a tax lien certificate, you now own a certificate which bears interest and is secured by the real estate on which the taxes are due. When the home owner pays his back-taxes to the government, the government will pay you the amount paid for the certificate plus the accrued interest.

This process usually occurs on a local (often county) basis and the rules and regulations (and the interest rates earned) vary from one location to another. So, before you invest in these tax lien certificates, you need to do some homework and learn the rules of the principality you are purchasing the certificates in. However, there is nothing to stop you from buying certificates from many different locations.

You may be wondering why the local governments holding these certificates do not prefer to hold the certificates themselves. The answer is that these tax lien certificates represent monies which these governments need to fund construction and repair projects and pay employee salaries. By selling the certificates, the governments get the money to continue paying their bills, and you get a great opportunity for an investment.

Of course, when you purchase a tax lien certificate, there is no guarantee as to when the property owner will pay the back-taxes owed and redeem the certificate. So, you may need to wait an unspecified amount of time for your money to come back to you. Some of these certificates pay off very quickly, some take longer.

What happens if the property owner never pays the taxes and redeems the certificate? Your tax lien certificate is secured by the property as a first lien. That means, if necessary, you can foreclose on the property and either resell it, rent it out, or live in it yourself. At this point, you own the property.

If you are interested in learning more about tax lien certificates, stay tuned to the Cash Flow Clarion. I will be reviewing "Ted Thomas' Secrets To Earning 16%-18%-24% Up To 50% On Secured Government Certificates" very soon. This is a comprehensive resource containing a 117-page introductory ebook which explains the basics of tax lien certificates, an ebook consisting of a very large county directory, plus two CD's. I am in the process of looking through this information as we speak and will let you know in the near future whether this resource is worth your time and money (in my opinion). Look for the review soon.

Are you looking for a good, relatively safe investment? Would you like to earn 11%, 13%, 15%, or even more on the money you invest? If so, investing in privately held cash flow notes might be exactly the answer you're looking for.

Here's how it works. Currently, there are countless people who are holding cash flow notes. These cash flow notes might be in the form of mortgages, trust deeds, structured settlements, lottery winnings, annuities...The list goes on and on. These notes pay their holders small sums of money on a regular basis, usually monthly, quarterly, or annually. However, many of these note holders would rather have all of their money now rather than waiting for many years to collect their money.

That's where you come in. You can buy these cash flow notes at a discount and earn a relatively good return on your investment. Returns in the 11-15% percent are relatively common. When you purchase a cash flow note, you will pay the note holder a lump sum of money for the note and collect the payments on the note yourself. You profit because you have purchased this note at a discount, depending on the rate of return you have decided you need to receive.

If you're just starting out, real estate notes are probably the easiest investment. These may be mortgages or trust deeds, depending on where the note is located. These terms (mortgage and trust deed) are often used interchangeably and the process of purchasing a note is the same whether it is a mortgage or trust deed. These are the easiest cash flow notes to deal with, because you can deal directly with the note holder.

As an investor, you can choose the return on your investment which you would like to receive. Almost all cash flow notes are sold at a discount. The size of the discount will depend on the percentage of return you choose to receive. The higher the return, the steeper the discount the note holder is required to accept.

Generally, the more risks associated with the note, the higher the return on the investment you can reasonably expect to receive. Risk factors involve things such as:

• Payor credit rating - lower credit ratings are riskier than higher ratings
• Amount of seasoning - the more payments made on the note, the safer the investment
• Payment history - a flawless payment history is safer than a note in which many payments have been late or not received
• Amount of equity in the property - the higher the equity, the safer the investment

These are a few of the risk factors which a savvy investor must evaluate. Once you have evaluated the risk factors and decided on what rate of return you would like to receive, you will need to calculate how much to offer the note holder for his/her note.

Once you have reached an agreement with the note holder and have performed all of your due diligence, you are ready to close the transaction. As with any other business dealing, you should perform your due diligence carefully. You'll likely want to confirm the payor's credit rating, have the property appraised, and review all the documents associated with the transaction. Providing all of the paperwork is in order and no surprises "pop up" while you are doing your due diligence, most transactions can be successfully completed in as little as 3 weeks or less.

First Class Cash Flow Handlers buys and sells cash flow notes. Please contact us for more information.

Within the cash flow industry, terms such as mortgage, trust deed, and deed of trust are used frequently and often interchangeably. Here, at First Class Cash Flow Handlers, we purchase both mortgages and trust deeds which are privately held and we often use these terms interchangeably, as well. However, the truth is that there is a difference between a mortgage and a trust deed.

Both mortgages and trust deeds are documents which are used to secure payment of a real estate loan. The mortgage or trust deed is "attached" to the property itself and, in the event that the borrower does not make the payments specified in the promissory note, the mortgage or trust deed can be used by the lender to foreclose on the property.

The difference between a mortgage and trust deed lies in the the way the foreclosure proceedings are carried out. To enforce a mortgage, the lender has to go to court. To enforce a deed of trust, the lender merely has to notify the trustee that the borrower has defaulted. As a result, a lender can foreclose a deed of trust much faster than a mortgage, often within a period of months.

In a mortgage, the lender is known as the mortgagee and the borrower is known as the mortgagor. These are the only two parties involved in a mortgage.

In a trust deed, there are three parties involved -- the trustor, the trustee, and the beneficiary. The lender is known as the beneficiary, the borrower as the trustor, and there is usually a neutral third party, known as the trustee, who is responsible for holding the legal title to the property until the loan is satisfied (paid off).

Though most lenders would probably prefer to use a deed of trust, many states do not allow deeds of trust because of the possibility that an unscrupulous lender can easily use the speedier process to take advantage of the borrower.

A deed of trust and a trust deed are simply different names for the same document.

While most mortgages or trust deeds involve loans made by commercial lending institutions, such as a bank, there are a significant number of owner-financed mortgages and trust deeds as well. Owner financed mortgages and trust deeds are just as described above, except that the lender is a property or business owner who has sold his/her property or business and financed the sale personally. In this case, the property owner (or business owner) takes the place of the bank or lending institution and the buyer pays the property owner directly, instead of making the payments to a bank or lending institution.

Owner-financed mortgages and trust deeds are also sometimes referred to as seller-financed, or privately-held, mortgages or trust deeds. These mortgages and trust deeds are a valuable asset which can be sold for cash should the holder of the mortgage or trust have a need for cash. 

This week, we're going to continue the discussion we started last week by talking about some of the things you need to be aware of when creating a seller-financed or owner-carry-back mortgage note.

Once you have located a buyer for your property and qualified them, have agreed upon a fair sales price and set the terms of the sale, and have carried out any necessary inspections, you will need to prepare to close the sale on your property. We always recommend that work with a qualified real estate attorney in order to make certain that your interests are protected. Your attorney will make sure that all necessary papers are in order and that nothing is overlooked which might endanger your investment.

If the property is being sold to more than one person, both parties should sign the note. For instance, if you are selling your home to a married couple, both the husband and wife should sign the promissory note. If your property is being sold to a corporation, you should make certain that the note is personally guaranteed. (You should also obtain and examine the credit report of the personal guarantor.) This helps to protect you from in the event of a default on the note and helps to remove the potential for fraudulent activities.

If you are creating a second mortgage, with an institutional lender providing the first mortgage, you need to make sure that your mortgage is recorded properly to comply with your local laws. Your real estate attorney should be able to help you with this.

You will also want to make sure that your second mortgage contains wording which makes a default on the first mortgage a default on the second mortgage as well. You should make certain your mortgage allows to check on the payment status of the first mortgage, which will require language to that effect written into the note.

Another potential problem you need to be aware of, if you are creating a second mortgage behind a institutionally secured first mortgage, is that the lending institution allows secondary financing. Some of them do not, in which case your seller-financed second mortgage would actually be a breach of the first mortgage contract. Being unaware of this type of restriction can certainly waste a lot of your valuable time.

Another "red flag" in creating an owner-financed mortgage occurs when the property value is far less than the sale price of the property. While you may get away with this if you are intending to hang on to the note yourself and collect all the payments until the note is finally paid off, you will find yourself looking at a huge discount on the note if you ever decide you need or want to sell the note.

This interest rate is another thing you'll want to consider very carefully when structuring an owner-financed note. While it is true that a higher interest rate will earn you more money over time, and will also make your note more valuable if sold, you need to be aware that there are laws governing usury and predatory lending practices. If you go afoul of these laws, you could very easily find yourself in a great deal of legal "hot water". Again, this is an area where a competent real estate attorney will be able to guide you. You can also find information about the current interest rates being offered by institutional lending facilities very easily and use these rates as a guideline.

On the flip side, you also want to be careful about offering an interest that is too low. The interest rate on your seller-financed mortgage should be fairly close to the interest rate being offered in the market. If it is too low, you will find yourself taking a large discount for your note when/if you sell it.

We hope you have this information useful. If you have any questions, please feel free to contact First Class Cash Flow Handlers for additional information.

This week, I'd like to talk about some of the questions I am asked most frequently by those planning on creating a seller-financed mortgage or trust deed to sell their home.

One of the most common questions is about buyer credit. Home sellers often ask if they should request a copy of the credit report for prospective buyers and many also worry about whether they have the legal right to request credit information. The answer to both questions is a resounding "yes". If you are considering loaning a large sum of money to a stranger, you would be foolish not to obtain their credit information. And, because you are considering loaning them a large sum of money, you have the legal right to request such information. You can further protect your legal rights by asking any prospective buyer to sign a document authorizing you to pull their credit history. In addition, if you are dealing with more than one buyer (i.e. a married couple), you should request the credit information for both partners.

We are commonly asked "Is there a difference between a mortgage and a trust deed?". The answer to that is yes, there is a difference between the two, but quite often, we use the terms interchangeably. There are differences in the way a foreclosure is dealt with and many states do not allow deeds of trust, so mortgages are most commonly used in those states. For our purposes, you can assume that when we use the term mortgage, the same statements apply to a trust deed unless stated differently. We will go into more detail about mortgages vs trust deeds in a future article.

Another commonly asked question is whether or not it is necessary to have the property appraised. And the answer is, it depends. You are under no legal obligation to provide an appraisal of the property. And you may very well be able to attract a qualified buyer and sell your home without one. However, if you ever decide to sell the note you are holding, any investor considering purchase of the note will likely require an appraisal of the property. The problem is that it may become more difficult to get that appraisal (especially if the investor requires a full appraisal of the home) once the sale has been completed and the property is no longer under your control. So, it may be much easier to simply acquire the appraisal before the sale. Of course, having a qualified appraisal also gives you a good basis for pricing your property as well as leverage for negotiating the price of the sale.

One common problem that I've seen several times over the past few years deals with the situation where a home seller is selling the home to someone he/she already knows, often a family member or friend. Often, these types of deals end up with no credit report and no appraisal being performed. And that's fine if the home seller intends to keep the note and collect the payments until the note is completely paid. The problems arise when the note holder (previously the home seller) has an expected need for cash and decides to sell the note to raise the needed cash. Often, these deals go sour because the credit rating is not what was assumed. And the deal sours even further if the appraisal does not support the selling price of the home, resulting in a lower equity value in the property. More than once I've seen friendships and business relationships ruined in this situation as the finger pointing and name calling gets out of hand. I've found it's always best to remember that friendship is friendship and business is business. If you do not feel comfortable asking your friend, relative, or business associate about sensitive issues like credit ratings, you should reconsider loaning the money at all.

I hope this helps some of you who are considering selling your home using owner financing as a payment option. Next week, we will talk a little more in depth about red flags and procedures that you should be aware of before embarking on creating a seller financed loan. Til then, if you have any questions, please feel free to contact First Class Cash Flow Handlers.

This week, I'd like to share with you a few of our true-life success stories. We hope these stories will illustrate the power of the cash flow industry and what it can do for you. All of these scenarios are factual, but we will not use the real names of those involved, in order to protect their privacy.

Betty came to us very frustrated. She had been trying to sell her home for some time, but her home was non-conforming and she was finding it difficult to find a bank or lender who would extend a loan to buyers interested in her property. She contacted us asking what she could do. She needed to sell her property for personal reasons and was quickly running out of time. She also needed a decent amount of cash up front in exchange for the sale. The solution we came up was to have her offer owner financing to her prospective buyers. Within two weeks, she had located a qualified buyer who was thrilled with the idea of not having to deal with bank financing. Betty proceeded to close escrow on her home and sold a large portion of the resulting cash flow note upon creation (called a simultaneous close) in order to raise the funds she needed. Because she liked the idea of collecting monthly payments and did not need to cash in the entire cash flow note to cover her cash flow needs, she elected to sell only part of the note. She received a large check, which was sufficient to provide the money she needed immediately, and continues to collect small monthly payments at this time. She is now quite happy, has been able to take care of her financial obligations, and enjoys having the extra cash flow every month.

Our second story involves John, who was the owner of a small business (a local restaurant/pub). John was approaching retirement age and interested in selling his business. Specifically, he wanted to sell his business to a loyal, long-term employee who had expressed an interest in buying the business. John liked the idea of the business continuing under the leadership of someone he had personally trained to the business, someone he knew and trusted. The problem was that his employee could not obtain a loan in an amount sufficient to cover the entire purchase price. The answer: an owner-financed note covering the remainder of the purchase price. In this situation, the owner financed note is in second position (a second mortgage), with the bank note in first position (a first mortgage). We helped John arrange a second position note in a proper ratio to the first note so that he could sell the note at some point in the future, if he chooses. At the current time, John has sold his restaurant to his employee and is helping out there as a cook on a part-time basis. He now has more time to spend with his family and friends, and seems to be enjoying his semi-retirement. He is unsure whether he will keep the second mortgage and continue to receive the payments, or will decide to sell the note at some point in the future.

Our third, and last story, is about Jennifer. Jennifer was seriously injured in a car accident several years ago and received a structured settlement as a result. She was receiving small monthly payments from the structured settlement, but she had need for some personal items which she did not have the funds to purchase immediately. Specifically, she needed a car to get her back and forth, and she needed some new small appliances for her home. Her monthly income simply wasn't enough to allow for the purchase of these items without some help. She just couldn't seem to save enough from her monthly allowance to be able to purchase the items she needed. Our answer to Jennifer's problem was selling a small portion of her structured settlement to raise the money she needed. Because she did not need to sell the entire settlement, she still receives monthly payments on it, enough to cover her expenses.  Within 2 two years, the amount of the monthly payment she is receiving from the structured settlement will increase to its previous level again. And Jennifer was able to purchase the items she needed with the funds we helped her raise.

We hope that these stories help explain what our company (First Class Cash Flow Handlers) does and how we might be able to help you, if you are currently receiving payments on a cash flow note or need to sell a property. If you have any questions, please contact us at 401-258-7158.

Do you need cash quickly? Perhaps you need cash to purchase a new car, or to buy a new home. Or perhaps you are thinking of starting a new business and need capital to begin. Maybe you simply want to take that dream vacation you've been thinking about for so long. Whatever you need cash for, if you own a cash flow note of any type, you likely have a quick source of cash at your fingertips.

If you were previously unaware that you could sell your cash flow note for cash, you're not alone. Many people don't realize that these notes can be liquidated and are a good way to raise cash when you need it quickly.

The first question on your mind may be "What exactly is a cash flow note?" So, let's start there. A cash flow note is basically a promise to pay. It may be a seller financed mortgage which you created when you sold your home, property, or business and are collecting payments on monthly. It may be a structured settlement resulting from an injury or accident. It may a lottery you won and are collecting periodic payments for. It may be an annuity, or inheritance, or any other type of payment you are promised to receive. Even accounts receivables owed to your business are cash flow notes and can be sold. If you sold an automobile, a boat, an airplane, or any other type of item and are receiving payments from the buyer, you own a cash flow note.

What happens when you sell your cash flow note? You will receive a lump sum of cash in exchange for the payments on your note. In other words, instead of collecting small payments over a period of many years, you'll receive one large lump sum of cash immediately.

What are you allowed to do with the money you receive for your cash flow note? Well, anything you want really. It's your money, so the sky's the limit. You can use the money to do whatever you like. You can take that vacation, buy that car, purchase that home, start your new business. Or maybe you have a child to put through college. Perhaps you want to go back to school yourself. Or you may just feel safer having the money in the bank, instead of trusting your payor (the person making the payments to you) to pay you on time. Whatever you decide to do, it's entirely your decision.

How much money will you receive for your note? Well, that really depends on the note itself. The fact that money depreciates over time will be taken into account when you sell your note. That's one of the reasons why cash flow notes are almost always sold at a discount. The other reason that a discount is standard is that any cash flow note carries a certain amount of risk with it. For instance, there is always the possibility that the note might default or other complications may arise with the note. The higher the risks involved with note, the steeper the discount on the note. 

How do you go about selling your note? There are numerous investors and companies who purchase these types of cash flow notes. First Class Cash Flow Handlers is one of those companies. You can reach them at 401-258-7158, or you can submit your cash flow note online.

This week, we're going to discuss commercial real estate notes. We'll explain in detail how to create a commercial real estate note that is valuable.

First of all, a commercial real estate note, as with any other type of real estate note, is a cash flow note which is secured by real estate. The cash flow note itself may be in the form of a mortgage or trust deed, depending on the location of the property.

The real estate securing the note, in the case of a commercial real estate note, will be an income-earning property. This property may be an apartment complex, a garage, a movie theatre, a beauty salon, a restaurant, a convenience store. It can be occupied by any type of business. However, it is important to note that commercial real estate notes are secured only by the property involved, not by the business that occupies the property. If a cash flow note is secured by a business, then the note is a business note, not a commercial real estate note.

Creating a valuable cash flow note for a commercial property is similar in many ways to creating a valuable cash flow note for a residential property. However, there are some important differences also.

As with a residential property cash flow note, the down-payment, the credit score of the payor, the seasoning on the note, the payment history on the note, and the amount of equity in the property all come into play. The terms of the note are also important. The length of the term and the interest will directly affect the value of the note.

Unlike cash flow notes secured by residential real estate, commercial cash flow note values will also be affected by the income producing ability of the property. Specifically, factors such as the annual gross rental income, the vacancy factor, the annual operating expenses of the property, the net operating expense of the property, and the debt coverage ratio must be taken into account. In addition, in some cases, the zoning of the property will become a factor, as may the current usage of the property, and the allowable uses of the property listed in its classification. If the zoning is "grandfathered" or there is some other type of variance in effect, that also might affect the value of a commercial note.

Recommendations for structuring a commercial cash flow note vary. Generally, a down-payment of at least 25% is advisable, although a down-payment of 10-15% may be acceptable if the note is very strong in other areas (i.e well seasoned, good credit score, first position, etc). The credit score of the payor should be at least 600 or above, and many cash flow note investors prefer 640 or above. Though it may be possible to sell a commercial note unseasoned, you are not likely to get good pricing for it. Notes seasoned for a minimum of 4-6 months are generally preferred. As with cash flow notes secured by residential property, a larger down-payment, longer seasoning, greater equity, and improved credit scores will make a commercial cash flow note more valuable. An unfavorable payment history, with late or missing payments, will negatively impact the value of the note. 

Senior notes on commercial properties, if structured correctly, are likely to be valuable notes which can easily be sold for cash. However, junior notes may or may not be viable notes. In this case, the 1st:2nd loan ratio should be no more than 3:1. The combined loan to value ratio (CLTV) will also play a part in determining whether the loan is sellable or not. A CLTV above 70% is likely to not be very attractive to a cash flow note investor and is not likely to sell easily.

First Class Cash Flow Handlers buys cash flow notes of any type, including commercial real estate notes. You may submit your note online, or contact First Class Cash Flow Handlers at 401-258-7158.

The following is an excerpt from the manual "How To Sell Your Home Fast In Good Or Bad Markets":

What do you feel is the best way to sell your home? Perhaps have an open house. Improve the looks inside and out. Advertise the special features of the home. Number of bedrooms, bathrooms, big back yard with a deck, a pool, double garage and so forth. Maybe the best way to sell your home is the sales price. It compares to others that have sold in your neighborhood. Or, your price might be a little less than other homes. How about cinnamon rolls baking in the oven when you show the home. That aroma certainly gives the home a nice touch. We could go on with more sales suggestions. However, we think you get the idea.

These sales methods have their good points. But most home sellers over look the most powerful method for selling a home quickly. We’re going to give you the method right now. We call it the "Secret Sales Weapon". It produces buyers instantly. The strategy consists of three magic words. This is the strategy.

"OWNER WILL FINANCE"

Imagine going through the classified section of the paper. You see several ads of homes for sale. Most of the ads stress the unique features of each home. All of a sudden you come across an ad that says the following.

"OWNER WILL FINANCE -- FOUR BEDROOM TWO BATH COLONIAL. JEFFERSON PARK".

We can promise that will be the first ad you call. In fact, that ad will be called by more buyers than any other ad. The reason is very simple. The words "Will Finance" sends a motivating sales message to every home buyer. The buyer says, "this house can be bought fairly easily. There won't be lots of red tape".

Think about it. Home sellers wanting all cash eliminate a huge percentage of buyers. Cash buyers are hard to come by. All cash requires most buyers to qualify for a loan. Bank loans are time consuming. They require home buyers to meet lots of rigid guidelines.

All cash actually blocks people from buying your house. Those stiff bank qualifications create a sales barrier. We feel that most buyers may have reasonable credit and decent incomes. But the stiff bank requirements stop a lot of buyers. However, when you eliminate some of the stiff requirements, the financial obligation of paying for the home is really no problem for a large number of these buyers. You and I ought to be selling to these people. Yet the banks are the barrier standing in the way. Owner financing blasts away this barrier.

Let’s review what we have told you so far.

The fastest way to sell your home is to offer owner financing. This means you sell your home on contract. Your buyer puts down 10 to 20 percent in cash. They sign a contract that obligates them to pay you the remaining balance over a period of years. Five, ten or maybe fifteen years.

We know what you're thinking at this point. You’re saying to yourself, “You told me you have a method for selling my home fast. I can get all cash. If I offer owner financing how will I get all cash?"

We'll answer that question by describing the following example. Let's say someone has a home they want to sell. The house is put up for sale with an all cash price. There is some response from buyers. But most of them are having trouble securing financing. Weeks and months go by without a sale. The home seller starts to feel depressed.

One day the home seller receives a phone call. The person introduces themselves as a contract buyer. The contract buyer purchases real estate contracts and mortgages for cash. The contract buyer says, "Your home will sell fast if you offer owner financing." The contract buyer tells the home seller, “If you will structure the contract with the right terms, I will buy the contract from you for CASH a few days after the sale."

This is how simple it can be to sell your home quickly and get all cash. You offer to sell your home on contract. Pick the best home buyer and close your sale. A few days later you simply take your contract and sell it for CASH to a contract buyer.

Owner financing will instantly multiply the number of eager buyers for your home. It gives you the ability to sell fast, because you're offering terms rather than cash.

If you're in a financial position where you don't need all cash, a contract can be a great investment. Home sellers usually want to invest the money they get from their home sale. Our reply is, “Why not invest in something you already know about?" In this case your own home. You can defer paying taxes on the gain. Plus, you'll get a better interest rate than banks pay. You get a nice income secured by your home. You understand it. You know the value. If you need to raise cash in the future you can always sell the contract.

The home buyer benefits by getting terms that are favorable. They have cut out the hassles of bank red tape. They have also saved the cost of paying points and loan origination fees.

There are so many ways people can benefit from owner financing. Home sellers can sell a house quickly on their own. Real estate agents can sell listings faster. Owner financing solves problems with homes that don't qualify for bank loans. The zoning may not be right. Or, there’s an easement or access problem.

We recently visited with a home seller who had a house located on a street not paved. The bank wouldn't loan on that house because of the unpaved street. The sellers offered owner financing, and the house sold immediately. When the sale closed they instantly sold their contract for cash.

Developers and contractors can use owner financing to sell property fast. Raising cash is no problem. Just sell the contracts.

Owner financing can solve problems with couples involved in divorce who need to sell a home. When the home sells the contract can be sold for cash. The proceeds can then be divided between the couple. This is something that can be useful to attorneys who handle divorces. It can also work for people dissolving partnerships.

The bottom line is owner financing solves more problems, and gets homes sold faster than any technique we know of. We’ll cover more strategies for selling fast in section two of this manual.

"How To Sell Your Home Fast In Good Or Bad Markets" is available through First Class Cash Flow Handlers. First Class Cash Flow Handlers will also buy your owner financed cash flow note.

Are you a partner in  real estate or business venture in which you would like to "sell out"? Does your partner have the funds or financing options to buy you out directly? If the answer is no, then owner financing may be the solution for you.

How does owner financing work? In this situation, you would extend your partner the credit to "buy out" your part of the business or real estate, essentially creating a mortgage secured by the real estate or the business in question. You partner agrees to pay you his/her share of the sales price in monthly installments, at a reasonable interest rate, over the course of a specified number of years.

The advantages for you in this arrangement are:

• The ability to "sell out" as desired
• A secure investment, at a reasonable interest rate
• An investment secured by real estate property or a business with which you are intimately familiar
• Tax benefits
• A guaranteed monthly payment
• A liquid asset, in the form of a mortgage, which can be sold for cash, if desired

The advantages for your partner are:

• The ability to purchase the real estate property or business in question
• Less rigid lending requirements
• Lower closing costs

But, what if you need a large sum of cash now, instead of waiting for several years to collect all your money? No problem. The mortgage you created when you sold your part of the real estate or business is a liquid asset which can be sold for cash! You can sell all or part of the mortgage and receive a lump sum of cash flow it.

If your partnership involves real estate, you will likely to be able to sell the note at creation, if you prefer. However, in all honesty, if the dissolving partnership is a business, you will probably need to season (collect some payments on) the mortgage before you are able to sell the mortgage note. However, in as little as 4-6 months, depending on the individual situation and business type, you will likely be able to sell all or part of the mortgage for a lump sum of cash.

First Class Cash Flow Handlers buys and sells notes of all types, including mortgages secured by real estate and by businesses. Please feel free to contact us for more information.