Many of those considering getting involved in the cash flow industry as private note seekers do not have a concrete understanding of what a note is. However, a little simple education on the subject can help new note seekers get started on the path to success in the note business.
When professionals in the cash flow business refer to a “note,” they are not referring to love notes, musical notes, or a “note to self.” In the parlance of the private cash flow business, the word “note” is short for promissory note. While it’s easy to get the different types of notes wrong, this term refers to an official promissory note; the right to collect payments according to the terms described in the promissory note itself. In most cases, a note is secured, which means the borrower stands to lose something if he or she fails to make payments according to the terms of the note. Security can be any form of property, including cars, boats, planes, or real estate. While some venture into niche markets, the type of IOU most searchers work with is real estate IOUs because they are well insured and it is easy to find IOU holders and buyers.
A real estate promissory note, commonly called a mortgage, deed of trust, or land contract, is simply a promissory note that is secured by a house, vacant lot, or other real estate property. These notes are very attractive to buyers and seekers for numerous reasons, one of the most prominent being the sheer volume created on a daily basis. Also, under most circumstances, real estate notes are safer because real estate tends to increase in value and its location is fixed, whereas many other types of property (such as cars) tend to depreciate and can be move easily. Buyers want to get the most out of their investment, which is why many of them choose to work with real estate promissory notes. They know that if a borrower defaults, it would be more realistic for them to recoup the invested funds by foreclosing on a single-family home than on farm equipment. It is also much more difficult for a borrower to hide a house than a tractor. Smart note finders know how to look for what buyers want, and real estate notes often are.
Regardless of the specific area within the private cash flow business that new ticket seekers choose to explore, they must understand that many of the people who own tickets and collect payments do not know exactly what they have or their right to sell those payments. . The knowledgeable note finder will be able to clearly address all of those questions and match that seller with an interested buyer for incoming payments on their promissory note. Once a new note seeker has the basic understanding of what a note is, it’s time to start developing the additional skills needed to start and maintain a successful note referencing business. The first thing is to learn how to use all this new information to locate note holders and refer them to buyers interested in buying their monthly payments.
