Welcome to the world of cash flow notes where people can make money as either a broker, consultant, or investor.
But first, just what is the Cash Flow Business?
The essence of the cash flow business has been around for hundreds of years – providing opportunity for people on all sides of a cash flow transaction.
Essentially, the cash flow industry is the buying, selling, or brokering of privately held debt. Anytime someone is owed money by someone else, either personal or business debt, there is a cash flow transaction… and an opportunity.
How can you benefit by being a part of the cash flow business?
There are basically three types of people involved in a typical cash flow transaction.
1. The Seller
For the seller of the cash flow it is a chance to receive a lump sum of payments as opposed to waiting for payments over time. Money today is worth more than money tomorrow. With cash now, the seller of a cash flow can invest, pay off debts, or build their business. By selling the cash flow outright, the seller avoids taking out loans and creating more debt.
2. The Funder
The Funder or Buyer of a cash flow has the ability to invest money for a longer term with a good return. A Funder might be a private individual or a large investing company. In either case, the cash flow is typically purchased at a slight discount – thereby giving the investor an attractive yield.
The Consultant or Cash Flow Broker
The cash flow industry grew rapidly in last 20 years largely due to a healthy and growing cash flow consulting market. Consultants or cash flow brokers are able to help sellers “shop” deals to the best financial funders – oftentimes with preferred access or special pricing. Think of the consultant as a “financial matchmaker.” Paring the seller’s cash flow with the best possible Funder for both price and performance.
In the end, each of the parties benefits from conducting a cash flow transaction.
- The Seller is able to get a lump sum of cash.
- The Funder is able to invest their money.
- The Consultant gets a nice referral fee for putting the parties together.
Currently, there are three primary and active categories of cash flow industry income streams.
Business Based – These are cash flows in which a business is the payer such as business notes, contracts, and invoice factoring.
Collateral Based – These cash flows have something tangible securing them and include real estate notes backed by property such as a home, land, commercial building, or other real estate.
Insurance Based – These cash flows typically have some sort of Insurance entity making the payments. Cash flows such as Structured Settlements, Annuities, and Lottery Winnings fall into this category.
The Opportunity…
Among the numerous benefits of being involved in the cash flow industry is the ability to enter into the industry as a finder with little or no cash.
It is not uncommon for someone to enter the industry as a consultant and then work to becoming a full-fledged funder or private investor. Plus it does not need to be all or nothing. You may choose to invest your own money on one transaction while brokering another.
Where to start…
If you are considering starting in the cash flow industry we would suggest you start with the two biggest cash flows; Private Mortgage Notes and Factoring Invoices.
These cash flows have the most active sellers and funders. They also have great training and industry resources available for someone that is just starting out.
For more information on the cash flow business be sure to check out our incredible collection of industry resources!