Archive for December, 2009
A Tale of Two Business Notes – Which One Would You Buy?
December 24th, 2009 categories: Selling Your Note, The Note Business
Hey . . . I really should just be wishing everyone a Merry Christmas, or Happy Hanukkah, or some other politically correct thing (and I just might if I come back to my senses by the end of the post) but it’s been kinda odd lately.
I’ve had more business notes cross my desk in the last month than in the last three years . . . kinda Twilight Zone-ish.
Which reminds me that people selling businesses (and the professionals who advise them) need just as much help at the point of sale as people selling real estate.
So here are two business notes to consider . . . you tell me which one you’d rather buy:
Landscaping supply business
- Sales price: $453,193
- Down payment: $40,000 (borrowed funds)
- Note amount: $413,193
- Amortized over: 120 (10 years)
- Interest rate: 4.5%
- Seasoning: 18 months
- Note balance: $365,315
Whaddaya think? So get out your calculators . . . crunch, crunch, crunch, salivate, salivate, salivate . . . wait . . . if you even picked up your calculator at all, then you’re wasting your time.
What jumps out at you like a gorilla at a tea party?
Of course! The down payment! It was pathetically small for a business (should be somewhere between 25-40%), and even then, it was borrowed!!! The buyer has very little ‘skin in the game.’ Plus, it’s a real estate related business . . .
No thanks, I’ll pass.
Ready mix cement business
- Sales price: $800,000
- Down payment: $300,000 (cash)
- Note amount: $500,000
- Amortized over: 120 (10 years)
- Interest rate: 5.25%
- Seasoning: 45 months
- Note balance: $345,965
OK . . . this looks a little better, but there’s some things I don’t like:
- low interest rate
- amortized over 10 years (5-6 is good)
- a corporation signed the note and there is no personal guarantee by any of the corporate members
But there are some things that make up for it:
- strong cash down payment
- almost 4 years of seasoning
- low note-balance-to-value (43.2%)
So, yeah, this is probably something that I can at least quote for a partial (don’t want to be on the hook for any more than the next 48 months, and even that’s stretching it).
So now that you’ve endured this riveting tale, let me take this opportunity to wish you and yours the simple goodness of life at this holiday season: a warm fire, good food, good health, a hot cup of tea in your hands, and lots and lots of laughter with family and friends.
- Get help with creating a good business note
- Create a good commercial note
- Can I sell a business note?
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Owner Financing and the Title Holding Trust Helps High End Home Avoid Foreclosure
December 11th, 2009 categories: Land Trusts, Seller Financing
Hey, I just got this audio file put together, and I think anyone interested in preserving their real estate asset by transferring it with the existing financing in place might be interested in listening in. It’s a little long… about 9 minutes or so, but I think it’s worth checking out:
You can read other articles on the Title Holding (Land) Trust here:
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Abundance is Right Around the Corner
December 9th, 2009 categories: Inspirational Notes
I’m not sure it’s really smart to post videos where I show up with morning face and bedhead, but I’ve never been one to have a keen sense of propriety.
It’s just that this is one of my favorite rituals of the whole year . . . and the timing’s great. I’m sure Santa will be good to me, but Mother Nature always beats him to it.
In 1983 she published a book entitled, “Open Your Mind to Receive.” On page 2, she recounts:
“A businesswoman was once despondent over financial conditions. Her affairs continued to be out of order so she went to the beach and sat there all day and most of the night. During that day on the beach, she realized that the grains of sand are countless on the beaches of the world.
That night she looked up and realized that the stars in the heaven are also beyond counting. She realized that the fish in the ocean lay so many eggs that if they all hatched, the waters would overflow over the lowlands. She thought of how leaves on trees continue to multiply year in and year out.
She became so aware of the abundance of the universe that she finally said, ‘Yes! The universe is lavish, abundant, extravagant, and it is all meant for my use and enjoyment!’ As she began to feel unified with universal abundance, her thinking changed from limitation to bounty, and her affairs quickly responded.”
As crazy as things may seem sometimes, most of us can find evidence of beauty and abundance that conspire to make us feel safe and overflowing even as cultural constructs are crumbling and reorganizing all around us.
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