Get Started in the Real Estate Cash Flow Business
The real estate cash flow business involves finding real estate note owners who need or want to sell their notes at a discount and then selling the notes for a profit to investors. If a broker is involved, the broker gets a fee for putting the transaction together. Real estate notes are discounted according to the age of the note, the value of the collateral securing the note and the creditworthiness of the borrower. Older notes are worth less and have a higher discount rate.
Instructions
Cash Flow Business
1. Research the real estate cash flow business by attending classes, seminars, reading books and checking on line materials. Decide whether you want to be a broker or investor. In order to do business as a broker, you may need to obtain a business license, broker's license and other licenses depending on your state laws. Investors do not need licenses when they are investing for their own personal investment.
2. Obtain legal and tax advice. Form a business entity such as a limited liability company or a corporation for your cash flow business in order to protect your assets and for tax purposes.
3. Find an experienced mentor to work with so you can learn business strategies and techniques that will turn your real estate cash flow business into a profitable business venture. To find a mentor, join an investment club in your area by looking on line, talk to other investors or ask your attorney or tax adviser if they know anyone. Make a business plan and follow it. You can find business plan software programs on line.
4. Advertise in the newspaper or on line to obtain note owner leads letting owners know that you are interested in purchasing their real estate notes for cash. Go to the county courthouse, and obtain a list of individual residential real estate note owners. Contact them by mail, telephone or in person to see if they are interested in selling their notes. Research the property values by checking county tax records and asking a local Realtor to prepare a free market analysis for you. Compile a list of at least 50 to 100 investors you meet, and contact them to see if they are interested in purchasing the notes so you always have a buyer lined up. If you are acting as a broker, you can receive a broker's fee after the sale closes.
