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Selling Your Note For Lump Sum Cash

by jaggerstone

Many people have monthly payments coming in from a structured
settlement, annuity, lottery winnings or from property in which
they hold the mortgage. Often these people find that they are in
need of the total amount rather than monthly payments over time.
Usually these note holders are people that need the money for
increased investing ventures or for reasons of financial stress.
Whatever the reason may be, they need someone to purchase the
note from them for a lump sum of cash in return.

A cash flow note is nothing more than selling a monthly note,
such as a structured settlement or mortgage note, for a lump sum
of cash in return. These transactions take place everyday in the
United States and is booming business for people who actively
pursue cash flow notes as a source of income.

Usually, the process of selling a cash flow note starts with the
seller locating a note buyer. A note buyer is someone that buys
notes for investment purposes and income streams. The note buyer
has certain criteria and standards the note must meet before the
note buyer will purchase the note. The note buyers evaluation
process typically consist of different factors including the type
of property, interest rate, the balance remaining on the note and
the credit of the payor. The note buyer does these checks to
estimate if the note is worth the risk he will assume if he
purchases the note. The note buyer must consider many variables
before agreeing to the purchase the note including bankruptcy by
the payor, declining interest rates or the payor defaulting on
the note.

In order to compensate and offset the risk, the note buyer will
offer less than what the value of the remaining balance of the
note is in order to make the risk within tolerable limits should
any of the above factors occur. Although the note seller will not
receive full value of the cash flow note, the seller will receive
a lump sum of cash freeing up cash that would otherwise take
years to receive in full. Some note holders need to liquidate to
increase their portfolio and purchase other notes with a higher
interest rate making more money than they would on the previously
held note.

This is referred to as the time value of money and which means
that the present value of your money is more than the future
value of your money. Selling a low interest note and taking a
lump sum payment and investing in a higher paying note earning
the difference in your new investment. Selling a note to a note
buyer can have a faster turn around time as well, rather than
applying for a loan from a bank or lending institution. Cash flow
note transactions can take up to two weeks, maybe less, whereas a
loan could take a month or longer for approval.

Cash flow note sales are a viable way for a note holder to free
up cash for liquidation purposes, taking the money and investing
it elsewhere for a better return. Or in some cases, a note holder
may need cash for emergency reasons or for health related reasons
and selling a note is a quick way to acquire much needed cash.
Although selling note is quick, a note seller should always do
their due diligence on a potential note buyer before ever
agreeing to sell the note.

Phillip Hatley writes about many subjects in the financial
industry including equities trading and cash flow notes. For more
information about selling cash flow notes, please visit his <a
href="http://cash-flow-note.blogspot.com/">cash flow notes</a>
blog.

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