SOURCE: Income Stream Exchange

Income Stream Exchange

September 09, 2015 03:00 ET

Fixed Returns Between 5% and 10% You Can Count on for the Next 50 Years

Not Available? Perhaps You're Not Looking in the Right Place

PALM DESERT, CA--(Marketwired - September 09, 2015) - As the lyric goes, "Match maker, match maker make me a match, find me find…."

Meet Mike Cheley of Graphtek Interactive, one of those California based internet firms. Over the last 20 years Mike and his firm have helped, municipalities, developers, resorts and manufacturers to improve their client/customer experience and to build brand awareness using traditional and online marketing. They have also designed and built dozens of web based applications to automate and streamline business processes.

Cheley has spent the last 6 months building a trading platform that will allow buyers and sellers of income stream products to meet and, in an auction platform similar to eBay, buy and sell income streams of all sorts.

What is an income stream?

An Income Stream is a stream of periodic payments made under a contract from one party to another. For example; $1,000 per month, paid for 10 years or $10,000 per year, paid for 20 years.

An income stream can come from a business or a piece of real estate.

The new definition of an Income Stream has grown to include 1) an income paid to a litigant from an Insurance Company to settle a personal injury lawsuit 2) an older annuity from an Insurance Company which pays a retiree an income in periodic payments or 3) a lottery pay-out paid to a lottery winner by a State Lottery Commission.

Income Streams can also come from workman's compensation settlement cases, wrongful death suits, medical malpractice suits, employment disputes and environmental settlements.

All of the above described Income Streams are assets, like a car, or a home or any other asset and like any other assets, Income Streams can be bought and sold.

People's lives and circumstances change and owners of Income Streams sometimes decide to sell in exchange for a single payment. In these cases, it is important that sellers get the highest possible dollar figure to replace their stream of payments.

For investors, an income stream with a track record of consistent payments and competitive returns can be a very attractive alternative over traditional fixed interest products. If that income stream is bought at a discount then return becomes greater than it was for the previous investor. The greater the discount the higher the return.

According to Cheley, he recently purchased the concept, intellectual property and trade secrets from a Wisconsin Group, "I saw the traffic first hand, saw the potential and have the resources, in house, to complete the trading functionality."

"I believe that we are offering investors an exciting alternative. We are offering liquidity to an asset class that has never had liquidity before today and can benefit from a global audience of would be purchasers."

Cheley shares a recent case, just about to be offered for sale.

"We got a call from a gentleman who is receiving a stream of income from his family's ownership in the shuffleboard courts, pool and party rooms at a high rise condominium complex in Pompano Beach, Florida that his father developed over 44 years ago. The income stream has a 44 year payment history and is scheduled, via contract, to continue for another 55 years. Over the last 44 years 47 owners have bought out of their leases and today 14 remain locked into the lease payments. The contractual obligation to pay is protected and grandfather via a Florida Supreme Court decision.

Payments are estimated to average $3,500 a month for the life of the lease with payments estimated to increase to $5,500 per month the last 5 years of the lease based on CPI increases.

The income stream is producing $1950 per month today with payment estimated to increase to $2,090 on February 16, 2016. Subsequent payment increases are estimated below;

YearIncome/ month
2021$2299
2026$2529
2031$2782
2036$3060
2041$3366
2046$3703
2051$4073
2056$4480
2061$4928
2066$5421

The seller, a 68 year old retired attorney from New Hampshire, is interested in liquidating based on a need for additional funds for the care of his 95 year old mother whose medical expenses exceed what insurance and Medicare cover. The retired attorney also states that for him, there are tax advantages to selling now.

According to Cheley, "Many of these potential investors are looking for competitive returns that won't put principal at undue risk, have a provision that will give them a cost of living increase and won't fluctuate with the market.

"Many investors are buying annuities right now based on a lack of other appropriate alternatives. What I would say to that group is, if you want a better return without a lot of added risk or you're worried about the annuity feature that causes your benefits to decline by half if you or your wife dies unexpectedly, buy a safe, non-traditional income stream at auction from our site. If you your circumstances change or perhaps you find something else, bring it back and list it on our site. But if you buy the annuity it's a life time commitment." says Cheley.

We knew that if sellers and buyers could find each other despite geographic obstacles we could create a market for these once illiquid assets.

It's a common story according to Cheley who believes that for every person who has a stream of income that wants to cash out, there is an investor, somewhere with sleeping capital that would be very happy to be earning 5% to 9%.

We are excited to fulfill this need and anxious to implement our trading platform for all sorts of non-traditional assets that need liquidity.

According to Cheley "The financial model is simple. We earn a fee of 2.5% if the seller pays in advance and 5% if the fee comes from the sale proceeds and we don't handle the financial transactions or offer advice. The fee is for use of our platform."

Cheley says "I know the settlement price for most of our deals usually give the investor a 7% average return, pretty much locked in for the life of the income stream. I don't know of any other fixed interest investment paying that type of return without high risk."

According to Cheley, use of the site for investors comes without expense to them. Investors will be able to find and bid on income streams that meet their objectives. And for smaller investors it allows them to tap into this opportunity that has traditionally be the domain of large intuitional investors.

Google analytics confirm that Cheley gets strong investor traffic each week. Currently we get several hundred visitors per week looking to sell structured settlements. The potential upside to get a better sales price due to the auction format is highly appealing to sellers. As we ramp up our marketing efforts and launch the auction platform we expect the site traffic to increase a hundred fold.

Now that Cheley owns the site he plans to take advantage of recently changed SEC regulations regarding public offerings and will soon be offering several different convertible debentures through a regulation A offering. "For people who want to keep it simple and participate in these Income Streams but don't want to perform the due diligence on individual cases they can simply buy the debenture. The debentures are also convertible to stock so investors get the upside potential as well. We will have a deferred debenture with a 4 year maturity and another that pays monthly, both are at 6%.

Cheley says, "If we can maintain our own war chest of capital we could be offering sellers the auction alternative or purchasing these alternative investments ourselves. We see a lot of 9% and 10% deals that we would like to own ourselves."

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