How To Find & Sell Cash Flow Notes


Not every residential real estate sale is sealed with a mortgage from a lending company. If the buyer cannot get a mortgage, then a cash note is set up between the buyer and the seller. The buyer puts down a downpayment, and then signs a note promising to pay back the rest of the purchase price in installments that would include interest. Sometimes cash notes are created by companies that facilitate the transaction between the buyer and the seller.

Cash notes take time to show a profit, and for that reason most individual cash note holders prefer to sell their notes rather than wait for them to become profitable. The people who buy these notes are organizations or individual investors who do have the time to wait for the notes to turn a profit. The person who facilitates the sale of cash notes from note holders to investors gets a commission, and that person can be you.

Finding Cash Notes – Research

There are several ways to find cash notes, and one of the more labor intensive methods is to research mortgage holders. You can go to your town or county office building and research properties sold using private lenders. These are usually cash notes, and you will need to write down the property address, note holder and the note holders address.

Finding Cash Notes – Advertising

If you want a steady flow of cash notes, then you will need to advertise. You can put up telephone pole flyers all over your area telling people you buy cash notes and include your phone number. You can advertise online, you can advertise in local real estate magazines and you can advertise in the local newspapers.

Finding Cash Notes – Networking

Real estate agents, mortgage brokers and escrow agents all deal with cash notes and can be excellent sources of leads. You should spend time making contact with these different professionals and make them part of your contact network.

Weeding Out Bad Notes

Any notes secured with liens or notes where the balance remaining is still close to the total amount are not going to make you any money. You want notes that are clean of liens and have a considerable amount of equity.

Establishing The Investment

Once you have your list narrowed down to the best notes, you need to hire a real estate agent to help establish the values of the properties you are considering. Any properties that have appreciated in value since the note was written will be very appealing to investors.

Send Out The Contact Letter

Once you know which notes you want, you send out a contact letter to the note holder explaining that you would like permission to sell the note. You do not actually buy the notes. You are the person who brings the seller and buyer together. You have an attorney write up a contract that states the value of the sale, which would include your commission, and then you facilitate the legal closing of the deal.

Since you do not actually buy the notes, you can start this kind of business with very little money. It can take time to build up a profitable business, but it can also be a great way to get your own company off the ground.