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| Cashing In with other cash flows Way back in our first issue, we introduced you to the $350 billion private, secondary real estate note market. But it is valuable to understand that the real estate sector is only part of the larger private cash flow industry a 4.7 trillion dollar secondary marketplace. There is a wide variety of privately held (and usually privately originated) debt and other cash flow instruments that are actively bought and sold. Operating somewhat like secondary markets in the banking and institutional lending arenas, the private cash flow market provides cash flow asset holders several huge advantages not often obtainable through traditional funding pipelines - including flexibility, availability, and softer underwriting requirements. For professional advisors representing holders of these cash flow instruments, awareness of these advantages, and a basic grasp of the possibilities, provides the opportunity to fulfill the most important service they have to offer their clients - solutions.
Seller-financed transactions have existed for decades - and potential buyers for these seller-originated cash flow debt instruments have existed right alongside. Essentially taking root in the private real estate note arena some 60 years ago, the private cash flow industry has gradually grown to encompass a wide spectrum of diversified debt instruments throughout the past few decades - as more and more participants continue to explore, and underwrite, potentially profitable financial niches.
Liquidity The ability to tap into the liquidity that these cash flow instruments represent creates a buffet of possible options for sellers, and their advisors, to access funds quickly. In addition, being aware of the various options available in the private secondary cash flow markets can assist in both forward planning and mitigating situations where liquidity may not be a primary issue, such as avoiding excessive taxation and other forms of transactional friction, estate planning, family law issues, partnership dissolutions, portfolio building, and even asset protection under the right circumstances. I have demonstrated some of these techniques in previous issues, as they relate to private real estate paper. The same concepts often apply across the whole spectrum of cash flow instruments and can frequently make a huge difference in solving a problem for your clients, whether they are doctors, debtors, investors, business owners, business buyers, developers, contractors, retirees, beneficiaries, devisees, or divorcees! And, as our secondary markets have grown and adapted, we have begun to see some crossover with traditional lending markets. With growing frequency, bank and mortgage company paper assets (including both performing and nonperforming portfolios) are being marketed through our services. And, we are seeing increasing numbers of loan origination packages coming through the door, particularly for the larger and more difficult to close lending transactions, including commercial, development, and residential related hard money and construction funding deals. The crossover of these alternative cash flows trading into the private cash flow industry has allowed professional cash flow brokers to expand their product lines and greatly diversify the scope of solutions they may be able to bring to you and your clients' situations - either as direct investors or as conduits to other viable funding sources who specialize in funding the type of transaction involved. As a cash flow professional, I have the basic due diligence information gathering and evaluation skills to help create and present packages to a wide variety of cash flow buyers and investors. And what I can't answer, I can usually find out through my networking resources. Don't hesitate to contact me to explore the possible range of solutions we might be able to come up with together, when the situation arises for one of your clients. And please feel free to call me ahead of time if you would like to find out more about the benefits I might be able to offer your clients.
Driven by small, independent cash flow professionals at the local level, the brokerage side of the industry has fueled the growth of investors purchasing alternative cash flows. As networking in the secondary market has grown and become somewhat more structured, a developing investor’s interest in purchasing non-debt related forms of cash flow instruments has been kindled as well.We have seen such esoteric cash flow instruments as annuity agreements, structured settlements, viaticals, lottery awards and similar prize entitlements, pension benefits, royalty agreements, deferred casino winnings, deferred sports contracts, and more, all joining the parade of purchasable cash flows. Approximately 60 identifiable debt and cash flow instruments - including the non-debt-related instruments above and others such as commercial receivables, business notes, medical receivables, automobile, marine and aviation paper, equipment leasing contracts, timeshares, government contract payments, retail installment contracts, manufactured housing paper, and the granddaddy of them all, real estate notes - are all actively bought and sold in private secondary markets.
© 2007 Hard Cash Note Buyers
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