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.