Jeremy Roll & I co-founded a investment network called FIBI (For Investors by Investors) 4 years ago. I consider him to be a tremendous resource of knowledge & information in the investment arena. Here is an article that I hope you will enjoy.

There is a common argument in the investment community between people that invest in lump sum pay outs or those that focus on cash flow returns. I believe there are many reasons to concentrate on investments that produce cash flow on a monthly or quarterly basis. Essentially, if your goal is to make passive income, cash flow should be your main goal as your expenses come in an interval schedule, rather than investing in stocks and bonds that do not create a steady and reliable income stream. I asked Jeremy Roll, a full-time investor and co-founder of FIBI, to write some words on the importance of cash flow in preparation for his upcoming seminar on the very topic:

“I have been a cash flow focused investor since 2002 and, after nearly a decade of cash flow investing, I have experienced the benefits of cash flow investing first-hand. For example, while the stock market was plummeting in 2008, my cash flow investments were on their usual schedule, paying on time and with the type of certainty that I knew I could count on. In essence, I could watch CNBC and hear about the day’s plummet while knowing that 10 minutes later I would fall asleep without great financial worries.

If this sounds too good to be true to you then I would highly recommend that you research cash flow investing further, as there are plenty of ways to invest for cash flow and I have nothing to sell you – except for a change of mindset. While most financial advisors continue to push stocks and bonds, both of which aren’t cash flow focused and have great uncertainty associated with them, many cash flow investors have learned that earning stable 10%+ returns in readily accessible cash that can have great tax advantages and that can be used to pay for living expenses and/or reinvest is not only a better path to take but can be much more lucrative than the historical long-run return of stocks and bonds (8% for the former, for example) and, in many cases, with equal or even less risk. As a Wharton MBA who knows many Financial Advisors, I can tell you that it’s a secret that financial advisors don’t want you to know because, in most cases, their earnings are directly tied to how much of your money you let them hold. It’s also how the wealthy invest, as they clearly don’t simply “roll the dice on” stocks and bonds like the majority of Americans.

If you’re a relatively low-risk investor and a conservative person, like me, then you’ll probably appreciate some of the benefits of cash flow investing, as it allows you to:

Earn more predictable returns than the stock market (with equal or less risk in many cases)
Earn better returns than the stock market (with equal or less risk in many cases), resulting in a higher net worth for you and your family in the long-term
Better plan for your future by being able to predict your future returns with more certainty
Have access to your cash flow for living expenses and/or for reinvestment, allowing you to spend or reinvest without encroaching on your invested capital

Sleep better – or at least with less worries – during today’s economically volatile times!
Although cash flow investing is a key focus from my perspective, passive cash flow investing is a more specific approach that makes cash flow investing that much more interesting and worthy of consideration. In essence, many cash flow opportunities exist that allow investors to participate passively, which means that they are operated and/or managed by an experienced investor who earns a fee that is typically aligned with the investor in exchange for managing the opportunity. This type of approach results in an investor simply collecting cash flow from the opportunity, typically on a quarterly or even monthly basis, without any additional effort. This strategy synonymous with “hiring experienced investors” on your behalf and it’s the strategy that I have employed since 2002 with some luck and good success.

Passive cash flow investing is clearly not for everyone, as it involves handing over control to the operator/manager, which some people are clearly not comfortable doing. It can also increase risk, as you’re now counting on an operator/manager and it’s imperative to find honest and capable operators/managers to work with (although these risks can be somewhat reduced by performing background checks and depending on the structure of the investment).

In summary, passive cash flow investing could open the door to a hands-off approach to earning cash flow for investors who don’t have the time to actively create the cash flow or for investors who simply prefer to hire experienced investors on their behalf, like me. It also presents the possibility of a more predictable financial future that allows you to sleep well thanks to less financial worries. If this sounds intriguing to you then you might want to take it upon yourself to investigate this method of investing in more detail, as I wouldn’t expect your financial advisor to make the recommendation to you anytime soon. Otherwise they might be out of a job!”

Jeremy is speaking on this Thursday May 26th at an FIBI event in Long Beach California. If you have not attended an FIBI event, they are networking events for investors that focus on education with absolutely no selling. This is a rare opportunity to hear someone extremely knowledgable speak on passive income without getting up-sold on books or tapes.

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Defaulted mortgages occur when the individual does make payments for their mortgage and the loan taken for the house is considered to be in default, where the agency that holds the note has the authority to take over the property. Bad credit mortgages, bankruptcy mortgages, non-performing paper, are some of the names of defaulted mortgages. Since defaulted mortgages are called by various names, it is not easy to determine whether a particular mortgage lender offers defaulted mortgages.

Defaulted mortgages generally result in the borrower losing the piece of real estate owned. If the situation does not reach that stage, defaulting on their mortgages may decrease their credit score, which will make it difficult to negotiate with banks to allow future loans. Many banks may not allow partial payments for the loans when there are defaulted mortgages. However, the bank sends a notice to the owner within 60 to 90 days prior to the determination of the default of the mortgages.

Defaulted mortgages are included in the range of specialized investments for savvy investors who recognize opportunity in economic downturns such as we are experiencing now. With the crash in the prices of houses and the lack of liquidity in the lending market, many investors need to consider defaulted mortgages now as an investment choice for a portion of their investment allocation.

Many people, who have defaulted mortgages, because of lack of regular payments have many disadvantages to face. Since the lenders consider it risky to lend their funds, such people find it tough to get any kind of credit. They continue to remain mortgage defaulters on their reports for many years from the time the loan goes into default, thereby, affecting the credit rating. Nevertheless, certain investors can utilize loan workout specialists to consider the circumstances of the mortgage defaulters and providing the ability for borrowers to stay in their homes for a win for both the investor & the homeowner.

Note Investing is a proven long-term profit strategy where you can buy and hold it. You need to have patience & expertise to maximize your investment. This way, you can control quality assets at discounted prices and get above average returns & cash flow for years many years. In the beginning, due diligence is very important when you are planning to invest in non-performing notes, as the buying and selling of non-performing notes, which is also known as the defaulted loans, requires the proper specialized education to understand possible risks & returns.

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We are teaching a class on Secured Income For Life with Note Investing Saturday @ 9am-3pm.  in Los Angeles

10601 Washington Bl.

Culver City,CA (310)280-9196

$199

2 classes in 1!  Note Investing & Creative Financing

) What is a note?

Types of notes:

2) Benefits of note investing

Comparison of alternative investments

How much can I make?

3) Evaluating note investments

Risks

Essential Documents

Protecting your investment

4) How to use notes for:

Supplementing current income

Retirement

Education Funding

Wealth Creation

5) Creating Notes:

Strategies for smart investors

Note Investor Educators:

Ellis San Jose: Managing Partner, The Note Guys,www.thenoteguys.com

CA Real Estate Broker/Agent with KW Commercial, Marina Del Rey.

Full-time investor, consultant, & educator. Ellis has been involved with both commercial & residential real estate investing for over 20 years. Ellis has been interviewed about real estate by publications such as Money Magazine. He is also the co-founder of FIBI (For Investors By Investors) with over 6 chapters in California and Texas.

Dawn Rickabaugh: A.K.A. as “The Note Queen” www.notequeen.com

CA Real Estate Broker, writer, educator, coach and author. She has been interviewed and quoted by influential publications such as Investor’s Business Daily, and Wall Street Journals Market Watch. She is dedicated to liberating & empowering buyers, sellers, and real estate professionals in today’s market.

Gerald Lemoine-Director of Acquisitions, The Note Guyswww.thenoteguys.com Full-time note investor focusing on special situation notes. Defaulted & Non-performing notes. Gerald has been a featured expert on many note investor forums & events. Gerald has developed deep relationships with institutional asset manager

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I got started in note investing in Los Angeles out of sheer frustration.  I was trying to buy single family homes in foreclosure in 2001.  I was diligently knocking on doors of people in foreclosure & going to trustee auctions and getting either outbid at the courthouse steps or getting doors slammed in my face.  If you remember back then, borrowing money was very easy & prices were starting to escalate, so sellers weren’t that motivated to sell at the prices I was offering. I had just quit my full-time job & I needed to make real estate investing work for my family. At the time my wife was working as an educational consultant with the school district & her paycheck was essential for us to survive.

I learned about note buying from a well respected investor & decided to give it a try, because the door knocking wasn’t working.  After a few weeks of changing gears, I got my first note deal.  It was a non-performing $13,000 note that I bought for $500.  I couldn’t believe it, the seller actually agreed to my offer.  After that I was hooked.  I then I found a $30,000 loan I bought for $6,000 & just kept going.

Now, I routinely find double & sometimes triple digit returns on finding notes. Most of the notes I buy for my own account range between $5,000-$50,000 .  It all started with my first $500.00. One of the features I like is that I can diversify into several notes very easily with relatively low to moderate investment amounts.

My goal now is to acquire a nice portfolio of notes that will make payments to me for the next 10-30 years. That in combination with a portfolio of rental property should make for a very comfortable retirement.  I strongly suggest you look into note investing for your retirement, education for your children or grandchildren, or just general financial freedom.

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