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| Are Business Buyer Notes Profitable? |
| Like anything else, it depends on the type of business you're
selling. Business buyer notes are documents secured by a
business, much like a mortgage broker except there is no real
estate involved. Often, personal property like cooking
equipment, furniture, and office equipment obligates one
individual or company to make payments, usually monthly, to
another person or company. Businesses are sold without the help
of bank financing; this makes it much easier for a person to buy
a business with a small down payment. Because the down payment
is small, most banks will not finance the remaining balance, so
the seller {owner} agrees to hold a "note" on the remaining
balance for the buyer. This is called seller-financing |
or
owner-financing. The buyer then agrees to pay the seller a
monthly payment. The person holding the note however does not
want to wait that long to receive all the money from the
business, so he or she looks for a someone to buy all or part of
the note being held.
Business buyer notes can be a good asset because the holder of
the note can get cash in hand from an interested buyer and there
are a lot of company's willing to buy business notes. The note
holder may choose to sell all or part of the note and receive a
lump sum for the cash he or she needs to pay off bills, go on
vacation, or to buy another business, while still receiving
monthly payments from the one who bought the business. The
holder may also want to |
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| sell the note to get out from under the
responsibility of the business. Most business owners really
don't want to be note holders but in order to sell the business
quickly the note was agreed upon. A drawback to being a business
note buyer is when future payments are sold for cash, the
current balance is always sold at a discount. The reasons behind
this is time erodes the value of money, and the payee is paying
the owner over time. Another reason business buyer notes are
sold at a discount is because personal property and office
furniture does not provide the same degree of safety that real
estate does. Also the interest rates on business buyer notes are
not high enough to interest investors to purchase these notes
unless it is |
sold at a discount price.
If you are interested in purchasing a business buyer note it's
probably a good idea to contact a service that will help you in
these matters. First there needs to be an assignment of the
security instrument and receive the endorsement of the
promissory note. The service you hire in this matter will
examine all aspects of this transaction, and verify all notes in
question, plus they will of course record all of the necessary
documents for your records. It all depends on the nature of your
agreements with all involved whether your business buyer notes
are assets or not.
About the author:
Leeanna is an expert author writing for Business buyer notes
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