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Commercial Notes

Commercial Real Estate Notes: How You Can Profit From Them.

A great profit opportunity is being missed by note brokers because they are unfamiliar with commercial real estate notes. It’s easy to assess a note on a home, but if someone calls you with a commercial note you may not know how to price it, who to sell it to and what kind of documents are required. Many note brokers would be hard pressed to define the word “commercial real estate.”

Definition: The most widely accepted definition of “commercial” real estate notes is a negative one. Residential notes are not commercial notes, they are notes on one to four residential units. Commercial notes are not residential, for example commercial notes include notes on: mobile home parks, office buildings, apartment buildings, shopping centers, businesses, parking lots and government buildings.

Finding “Good” Commercial Notes: Several Institutions will buy commercial notes up to $1,000,000. There are many advantages to becoming an expert in commercial transaction notes. You will have very little competition. You can develop a steady source of notes by working with professionals who will refer business to you. Commercial real estate brokers, developers and contractors see many such notes. If you pay them a finder’s fee you can open a veritable pipeline of notes. This is far more efficient than dealing with one note seller, who only has one note to sell.

Selling Commercial Notes:  There are not many buyers of commercial notes. You want to develop a relationship with an institution that understands how to quickly underwrite your commercial deal. You can use your Direct Connect Data Base, or visit our data base of corporate note buyers at www.nbdc.net.

To sell a commercial note you need to develop a professional “package” to submit to the note buyer. The more information you can provide the more quickly they can fund and close the deal. Your package should include the standard information, including a copy of the note or mortgage, a copy of the closing statement, any appraisals, pictures, insurance information, etc. In addition, you should try to obtain a Dunn & Bradstreet report on the business, a profit and loss statement depending on the payor’s credit, tax returns if possible. On apartments, commercial note buyers will need information on expenses on the building, gross income, seller’s purchase price, and date purchased. On a business, we will want information on the new buyer: how experienced is he or she in the business? Why did the seller sell the business? What is the local competition?

While we do not need all of this information, the more you know about the payor, the business and the property, the greater is the likelihood that we can buy the note. Complete informational packages are what separate the amateur note broker from the professional.

Problem Commercial Notes There are commercial notes that note buyers generally cannot buy. Although, with the competition growing among note buyers, who knows? Commercial notes that are hard to sell include:

  • Churches.
  • Notes where the payor is charitable organization.
  • Night Clubs
  • Motels
  • Any property that may have potential EPA, hazardous waste problems, such as gas stations.
  • Commercial farms and orchards.

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  1. 14 Comment(s)

  2. By bruce torkan | Reply

    there is a building that I want to buy the note of I need to know if you can help me , the building is located in Lancaster CA . please contact me any time during the day time and any day

  3. By Marc Faulkner | Reply

    I agree 100%. Commercial notes are a great niche and there is little competition as most note brokers are intimidated by the larger numbers and more educated note seller. Since the balances are usually higher the fees made are better and that is why it is worth learning all you can about these types of transactions. We have helped a lot of brokers get their first commercial notes sold and enjoy working on these projects.

  4. By greg creighton | Reply

    I have a client that is interested in buying a commercial note in the range of 1 million. would prefer that property be in WA state but will consider any deal.

    Please reply by email

  5. By Mr Simon | Reply

    I have a note for a commercial peroperty in California selling for just above the $1 Million mark, secured by real estate recently appraised for $2 Million. Very secure payments. Contact me for details.

  6. By Scott Crouch | Reply

    I have a client looking to purchase performing and non performing notes across the United States. 500M in escrow and ready to purchase.

    The Investment Group at Asset
    scottc@assetrealtygroup.com

  7. By Patrick | Reply

    I am direct to a private fund. We are looking to refinance commercial notes where the balloon is coming do. I also do:
    Churches,Night Clubs,Motels,convenience stores, gas stations and farms/orchards.

    I pay referrals too :o)

  8. By Patrick | Reply

    Mr. Simon…Get with me as I may be able to assist you.

    patrickzanders@financier.com

  9. By Joe Eddings | Reply

    Greg, I am associated with a investment firm in WA and we currently has three non performing commercial notes ranging from $800K-$3MM. Contact me for more information, joe@eddingsgrpoup.com.

  10. By Selena | Reply

    I have access to commercial note performance data contact me if you are interested from orgination. spoole153@aol.com

  11. By Rick | Reply

    I am also direct to a private fund.

    We can restructure and buy commercial notes by negotiating with the bank for preforming or NLN owner occupied deals.

    rick@nmrgrealestate.com

    (Finders Fee Also Available)

  12. By Coy | Reply

    I am a Commercial Agent specializing in Commercial Notes secured by real property in Houston. Please contact me I you need any assistance at coy@roycerealty.com

  13. By David schechter | Reply

    Investors looking for 8%return annually, paid quarterly, secured by hard asset and 50% net capital gain of fund minus expenses, interest, and principal, contact me @9548375327.

  14. By Alicia Riley | Reply

    Hello Mr Simon,

    I am very interested in learning more about the note you are holding.
    Alicia.riley2010@gmail.com

  15. By claude simmons | Reply

    I have access to npn notes for new york and florida,commercial and residential.no daisy chains.

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