One of the most powerful wealth building techniques in the cash flow industry is the “Buy Full – Sell Short” strategy. Capitalizing on the power of compounding interest and the time value of money, it enables note brokers to own rights to future note payments with little to no money of their own.
In the stock market investors try to “Buy Low – Sell High”. While this sounds simple in theory, the practical application can be challenging. Just look at the losses experienced by many stock investors in recent years from an unintentional “Buy High – Sell Low” implementation! Fortunately, the “Buy Full – Sell Short” of the cash flow industry has a much simpler and reliable execution plan.
This strategy is based on the purchase of the full payment stream remaining on a seller financed note from the seller with the resale of a shorter payment stream to an investor. This enables a cash flow professional to earn a commission on the initial sale of the partial payment stream to the investor AND keep a portion of the future payment stream as a personal wealth building vehicle.
The payments remaining after a partial investment pays off are also known as the tail end or back end of a note. Retaining these payments can often be accomplished with only an investment of time and without the investment of personal capital.
To see how this strategy created a residual income of over $130,000 on just one deal be sure to read Real Deal #151 – Residual Income with Notes!
While a future income stream is the intended goal, the benefits are amplified in the event of an early payoff. On the flip side there is also a chance that the buyer might stop making payments putting the future payments in jeopardy.
With more note investors proposing partial purchases as a result of weakening real estate values it is a good time to become familiar with “Buy Full – Sell Short” strategy. It is just one of the many tools available to cash flow professionals that enable you to secure financial independence.
For more tips on profiting from owner financed notes visit the bookstore for Personal Profit Series: Notes – Your Complete Money Making System to Buying, Referring, Creating and Holding Real Estate Notes!