Have you ever heard of the experiment carried out on pre-schoolers where they were offered a plate of cookies now, but if they would wait for just one hour they would be given twice the cookies on the plate? Most of the children decided to eat the cookies now.
Most adults are like those children. They would rather have it now instead of waiting for a bigger reward. A knee-jerk reaction in the minds of many would allow them to take a hundred dollars in cash now instead of waiting a year for one thousand in cash.
Buying notes for investments works on this human weakness to want it now without seeing the big picture. Sometimes people are willing to take a loss in order to get a large sum of money now. Notes they own are sold at a discounted rate for money upfront. They will turn their back on the money they will never see for the chance to get a lot of money now.
A cynical person might say you are merely profiting off the suckers and if they cannot see the big picture then they do not deserve all that money. What is wrong with that? U.S. fortunes are often made by capitalizing on the stupidity and misfortune of others.
Note investors will determine how much value is in the note before seriously considering buying it. Some notes are almost worthless because either they are too old and lost most of the value or it has an attached debt factor to it where others are entitled to a portion of it already. Those notes will almost never be purchased.
A good note without liens and relatively new will be offered at a steep percentage of its real value. They may offer anywhere from 40-75% of the current value of the note so they can return an investment of 25-60% of their money. This is usually more money than they would receive by placing money in stocks and other investment vehicles.
Of course to be an investor it requires deep pockets, but the benefit of this is a good size portfolio can make you super wealthy in 5-10 years. It can allow you to reuse your profits to build up a bigger portfolio. You might even make this your perfect investment for retirement.
If you are a note flipper, the profit margin really is not quite that great. Just remember, unless you have a network in place, you almost will never find the hot notes and even when you do the percentage you get from a deal is a mere fraction of the value after all the legal fees are processed. However, if you are really determined to get started in investing, flip enough notes until you can afford to invest in them yourself.
