One concept that cash flow note brokers must understand clearly is the time value of money. As time goes by, money loses its buying power, or more specifically, a dollar ten years ago could buy more than a dollar can buy today. When loans are borrowed, the lenders charge an additional percentage of the loaned money to compensate for both the decreasing value of the money and to yield a profit.

However, this does not mean interest rates will be the same for every borrower. First of all, the state of the economy will cause fluctuations in interest rates. Secondly, the lenders look at factors that affect how risky the loan might be. Lenders usually look at the fiscal responsibility of the person who is borrowing the money, as well as the property value for which the loan is secured.

Smart Cash Flow Note Brokers

Cash flow note brokers come into the picture when a lender with promissory notes that are not yet paid off decides to sell the notes. Due to the time value of money, notes are sold at a discount after factoring in many different points. The property condition, location, and type are important factors, as well as the payer's history and credit.

Once promissory notes leave one lender's hands and go into the hands of cash flow note brokers, many steps may follow. Note brokers will maximize their cash flow and try to buy many notes. Often they will send letters to the payers in an attempt to increase monthly payments or to even refinance the loan. By restructuring the notes, brokers can increase the note value and resell notes for a higher profit.