Big Bucks in Business Notes

Big Bucks in Business Notes.

Thursday, June 12, 2003

9:00 am - 5:00 pm

The New Tuscany Hotel, Las Vegas, NV

Cost: $195, includes the instructor's 350 page volume on every aspect of finding, evaluating and brokering business notes.

Instructor: David Butler

This course will teach you everything you need to know to make large commissions from business notes. There is an abundant supply of notes that were created when small businesses were sold. There are two or three institutional note buyers who will buy all the qualified notes you can find.

Your job is to find and then evaluate the business notes you locate. In this powerful class you will to exactly do this.

In addition you will receive the 350 page book "Goin' Downtown, The Complete Guide to Making Money With Business Notes"

Back to Convention Page

Following is a review of Mr. Butler's book from NoteWorthy Newsletter.

====================

If you wish to sign up for this powerful class call NoteWorthy Newsletter at 800 487 1864.

$195, June 12, 2003, Tuscany Hotel, Las Vegas, NV

Making Money With Business Notes

"The good news is that there is an almost unlimited number of business notes in the world,” a Business Broker told me recently. "The bad news is they are all bad notes…the owners never seem to pay on time.”

"Not quite true, but close” said Walt Poser, (800-333-1527) the largest business note buyer in the country. "Our statistics show that about 20% of all the notes we buy go to collection, about 25% are only collectable with extraordinary efforts, about 25% only pay with some prodding, and about 25% or so, will pay on time."

Keep the Old Owner

There just seems to be no niche market that is easy. Nonetheless, a note broker who understands the difficulties, who knows about small business valuations, and who is willing to develop a good marketing campaign, can make substantial commissions by buying or brokering notes secured, not by real estate, but by a small business.

A typical transaction might be the sale of a Tavern for perhaps $200,000. The new owner made a $50,000 cash down payment and has purchased a liquor license, some fixtures and a lease. There is no real estate involved. He may be paying on a $150,000 note, which has no real collateral. In fact, most business note buyers don’t even ask for an appraisal. They depend on the credit, and experience of the new owner. Typically, business note buyers will only buy a portion of the note, thus keeping the previous owner involved in the event the new owner has problems.

Business Valuations

Until now, it was not easy to learn the intricacies of this portion of the note business. The one good book The Business of Business Notes, by Ed Lisogar of National Capital Corporation [800-xxx-xxxx], a long time buyer of notes in this niche was our only resource. Now, Dave Butler, of America’s Note Network, has published a new, major addition to the scant literature in the discounted note business.

Goin' Downtown, The Complete Guide to Making Money With Business Notes, is a 600+ page volume that covers almost every aspect of business notes. The value of this book for note brokers include helping you understand the business note market, statistics on how many notes there are, unique marketing ideas for finding and working with business owners and business opportunity agents, and techniques for understanding how a business and a business note should be valued. Some of this is complex, but there is enough information for you, the reader to develop this niche market. Learning about the risk and reward of business notes can lead to some very large commissions. The author cites brokers who have earned $50,000 commissions and more.

Huge Number of Notes

If you are serious about pursuing business notes, Going Downtown will be invaluable. Although you will have to be willing to tackle a 650+ book that at times bogs down in the minutia of the business note industry. On the other hand, you will be encouraged by the opportunities the author uncovers. Most note brokers simply don’t understand this enormous industry, and are missing a lucrative market.

For example, 200,000 small businesses are sold annually, and about 90% of these are seller financed. In fact, Mr. Butler points out that most of these sellers did not want to carry back a note, but had no choice. He writes, "According to the Business Reference Guide, 2000, business brokers are estimated to handle a ‘soft’ 50% of the total annual small business sales…doing the easy math, we can see that [business brokers] are a source for 70,000 to 90,000 new notes each year!”

Risks

Your job, as a business note broker is first to find the notes, and Goin' Downtown has an excellent marketing chapter. Second, you must understand how to talk to the note seller. There are dialogues, almost stories, in the book, in which the "notemeister” talks to the note seller and extracts the information he or she needs to underwrite the note. Most business notes are simply not worth pursuing, considering Walter Poser’s comments. Third, you need to know how to analyze a business note. The book contains all the forms and questions you will need to evaluate the note. Fourth, you must explain to the note seller why you can only buy a portion of the note, and why the perceived discount is large. If you understand the risks in business notes, you will understand why the industry must buy at very high yields. However, many of the business note sellers are motivated, and with the judicious explanations described in this book, you can show them why selling to you is a wise decision.

Byron Rouda’s company, Security Financial, Inc. (800-982-5945) told me he bought a note with a 25% loan to value, five years of seasoning, and an experienced business owner. The note still went bad. The rationale for pricing business notes is so subjective that the risks cannot be evaluated with any accuracy. That is why the yields are high. However, without us the holder of the notes would not be able to sell them at all. Clearly, they are happy that we have created a secondary market for this product. Additionally you can earn commissions by helping business sellers.

My complaints about the book are trivial. I think it is far too long, and should be severely edited. I feel the title, Goin' Downtown trivializes a valuable book, and an important industry. Nonetheless, after reading the book, you can develop such a good feel for business notes that you could become an end buyer yourself. The author points out that becoming competent in business note brokering does not have to be an overwhelming task. He writes, "...gathering information, finding the note seller’s motivation, lowering his expectations, and packaging the deal properly will usually get the job done. On the other hand, the more skilled we are, the more deals we will close, and the more profits we will make.” There is no better book achieving this level of expertise.

Dave Butler will teach a business note class after the 17th NoteWorthy Convention. His class will be on Thursday, June 12, 2003, and will include Goin' Downtown, and a full day of instruction on how to make money with business notes. The cost for the class is $195. For more information call NoteWorthy at 800 487 1864.

Back to Convention Page

Sites appearing in these ads are not affiliated with NoteWorthy.

Find out more about NoteWorthy...you can email us at staff@noteworthyusa.com, or call us 800-487-1864.

To learn more, visit our secure on-line bookstore. We sell inexpensive products that support the discounted cash flow industry.