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If you, or someone you know, receives payments secured by an asset such as a property or a business, those payments can be sold for cash.  For example, if you sold a house, were paid a down payment and currently receive payments for the remainder, I can pay you cash for some or all of those payments.

The idea is similar to buying a house using a bank mortgage.   Later you may receive a notice to send your payments to a different bank.   Banks buy and sell mortgages between each other all the time.

Some prefer to specialize in providing new loans to home buyers.   Other banks would rather service  those mortgages and collect the payments. Often people who receive payments on a mortgage, decide that they would rather have a lump sum of cash, instead of payments.   Individuals can sell those payments just like a bank can.

The business that makes this opportunity possible is called the cash flow industry.   We pay cash for cash flows. Cash flows are the monthly payments mentioned above.

 

There are many types of cash flows that can be sold.   In addition to cash flows from mortgages on residential and commercial property, other cash flows that can be sold include land notes, divorce liens, accounts receivable, purchase orders, structured settlements, lottery winnings and private notes held from the sale of a business (business notes).

How Would You Like To Get Paid?

First, let me clarify that all notes of this nature are sold at a discount.   Yet the sale of first position notes does result in substantial payouts.

You typically have a choice of how you get paid.   By that I mean you may choose to take one payment based on selling the full note. If the note includes a balloon  payment,  you may choose to sell  only the payments prior to the balloon,  or only the balloon itself, and get paid accordingly.

You may choose to get paid for only part of the payments you own, for example, the next 60 payments only.   In that case you would receive a lump sum now, and start receiving the remaining payments thereafter.

You also may choose to sell part of each payment.   For example you could sell 50% of each payment, in return for a lump sum of cash, and continue to be paid the other half of each payment.

The important point to remember is that you do not need to sell your entire note.   Based on your needs, I will help you by structuring a deal that pays you according to your needs.

Further Considerations In Selling A Note

All notes when sold are discounted based on the time value of money.   Simply put, the dollars you have today, will have less buying power in future years.   Even though the payments you would receive from your note, in say ten or fifteen years are the same as today, their value will be less.

An investor buying your note now, will be paying you in today's dollars for payments they will receive in lower valued, future dollars.   Therefore, the note buyer will discount the lump sum of cash they will pay you now.

Keep in mind that by selling your note, you also pass along all associated risks. This includes the risk of late or missed payments, the chance of default by the payor, and a potential foreclosure process that the note buyer would have to take on.

The value of your note depends on a number of factors.   The evaluation will consider details of the note itself and any corresponding security instrument.

The type of security instrument will vary depending on the type of note.   For example, a real estate note may use a mortgage, deed of trust, contract for deed, or land contract.   For business notes, a Chattel Security Agreement places a lien on the business assets that were sold, and a Uniform Commercial Code Financing Statement(UCC-1) records the seller's lien.

So the way the note and security instrument are written will impact the value of the note.   The credit history of the payor, and the features of the collateral securing the note are also important factors used to determine the value of your note.

New Notes

For notes yet to be created, you will find helpful information throughtout this website to assist you in structuring notes. If it would help you to sell all or part of your new note after one payment is received, a simultaneous closing could provide the cash you need.

The Process*

1. First, I need information about your note.   Select the link to the appropriate worksheet (real estate notes, simultaneous closings, business notes or structured settlements).   The data will be stored in your browser's local storage until the form is submitted. So if you don't finish the first time, as long as you return to the same browser, the worksheet will autofill with the last completed data. If your note is different than one of my worksheet options, start at Other Payment Streams.
2. I will contact you to discuss your situation and answer any questions you have.
3. I will look for the best way to purchase your note, and contact you to present my proposal.
4. After we agree on the price and terms to purchase your note, you will sign a Note Purchase Agreement to continue the process.
5. Once I receive a signed Note Purchase Agreement, I will advise you of the paperwork you need to provide in order for the due diligence to proceed.   The required paperwork will vary depending on the type of note.   A copy of the recorded Security Agreement and a copy of the Note are typical documents that I will need.
6. After all the required documents are received, the due diligence corresponding to your type of note, will be completed.    This includes checking the credit history of the payor, and for real estate notes, a property appraisal and title search.
7. The final due diligence needs to match closely with the note buyers expectations, based on the information provided along the way by the note seller.   If any discrepancies are found, we will discuss them.   The note purchase price may be reduced accordingly.   A significant discrepancy could result in a purchase offer being withdrawn.   But this is not the plan or desire of the buyer.   Complete, accurate information provided throughout this process, works best for all parties in the transaction.
8. Based on favorable due diligence, a closing will be scheduled, and at that time you will be paid the agreed upon price.   Unless otherwise agreed, all closing costs are paid by the note purchaser.   This includes the cost of any appraisal, title search and credit check.   The only cost a note seller would pay, is for an attorney should the seller decide to hire one.
9. From the time that all documents requested in step 5. are received, a closing usually takes less than 3 weeks.   The process does take longer for structured settlements and varies depending on state laws.   For structured settlements as a rule of thumb figure on 90 days start to finish.

*FOR STRUCTURED SETTLEMENTS, REFER TO THAT PAGE.

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