December2001
New
This Issue
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A
Christmas Gift from NCC!
The holidays are
around the corner. As you're running crazy from store to store, getting
your "list" taken care of, how about doing something nice
for yourself?
For the rest of
December, order either one of our best selling manual and software publications,
"Cash Flow Correspondence" or "The Business of Business
Notes" and receive a 25% "Merry Christmas" discount!
That's right, 25% off of either manual and software*.
Want them both?
Take 30% off the combined retail price when
ordering the two together! That's a $53 dollar savings!*
You can check both
publications out at the Instructional
Manuals page at our web site. While you're there, read the reviews
from industry experts. You'll see why both have become the technical
AND reference manuals of choice for the brokerage community.
So treat yourself
this Christmas. The benefits will be around LONG after the tree and
lights are gone!
Make a note...this
special Christmas offer expires January 1, 2002. Just follow the simple
ordering instructions at the Instructional
Manuals page.
NOTE: This discounted
offer is only valid when ordering directly
through National Capital Corporation.
* Shipping and handling charges still apply. Add shipping
handling for EACH manual, whether ordered together or seperately.
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Educational
Business Note Seminars on Hold following WTC Bombing
As a result of the tragic events of September 11, several of Ed Lisogar's
high powered business note seminars have been put on hold indefinitely
(see Seminars).
"We know these
postponements are disappointing", says Lisogar. "We're as
disappointed as the hundreds of attendees that have contacted us however,
the present response we've gotten is that most simply want to let things
calm down somewhat which I can appreciate. With the Holidays upon us,
it's best to be close to home and more importantly, family".
Keep an eye on the
Seminar page at the web site. All new cities will be listed as they
are scheduled. There will also be a special e-mail notification as cities
are added. NCC apologizes for the inconvenience the cancellations may
have caused, and looks forward to resuming their sold out one day sessions
in the new year.
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Letter
from home…Germany salutes The United States…
This is an e-mail
from a young ensign aboard USS Winston Churchill to his parents. (Churchill
is an Arleigh Burke class AEGIS guided missile destroyer, commissioned
March 10, 2001, and is the only active US Navy warship named after a
foreign national.).
"Dear Dad,
We are still at
sea. The remainder of our port visits have all been cancelled. We have
spent every day since the attacks going back and forth within imaginary
boxes drawn in the ocean, standing high-security watches, and trying
to make the best of it. We have seen the articles and the photographs,
and they are sickening. Being isolated, I don't think we appreciate
the full scope of what is happening back home, but we are definitely
feeling the effects.
About
two hours ago, we were hailed by a German Navy destroyer, Lutjens, requesting
permission to pass close by our port side. Strange, since we're in the
middle of an empty ocean, but the captain acquiesced and we prepared
to render them honors from our bridgewing. As they were making their
approach, our conning officer used binoculars and announced that Lutjens
was flying not the German, but the American flag. As she came alongside
us, we saw the American flag flying half-mast and her entire crew topside
standing at silent, rigid attention in their dress uniforms. They had
made a sign that was displayed on her side that read "We Stand
By You."
There was not a dry eye on the bridge as they stayed alongside us for
a few minutes and saluted. It was the most powerful thing I have seen
in my life. The German Navy did an incredible thing for this crew, and
it has truly been the highest point in the days since the attacks. It's
amazing to think that only half-century ago things were quite different.
After Lutjens pulled
away,the Officer of the Deck, who had been planning to get out later
this year, turned to me and said, "I'm staying Navy." I'll
write you when I know more about when I'll be home, but this is it for
now.
Love you guys."
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Calling
all Business Brokers…this article will open doors for your business
note business
Over the years I've
received endless calls, letters, faxes and e-mails asking for something,
anything, that you can use to help you break into that local circle
of business brokers (Note: The business brokerage industry is changing
and you'll find that they no longer like to be called "brokers"…it's
now "business Intermediaries"…go figure).
As cash flow brokers
have realized, the competition for real estate paper is huge and the
smart broker has branched out into alternative, diversified cash flows
where the competition is minimal. For those of you that haven't caught
on yet, the number one most ignored income stream with the greatest
potential are seller financed business notes.
Those of you that
have made "The Business of Business Notes" a best seller (see
the Instructional Manuals page at the web site) know that business brokers
(OOPS! I mean Intermediaries) are the prime source for these high risk
(yet high profit) notes. However, getting to the "inner circle"
is tough and takes perseverance.
The following will
assist with your marketing efforts, specifically in breaking through
to the business intermediary community. It was published recently in
a national publication distributed nationwide by VR Business Broker's
corporate offices. It provides an insight into the different ways they
can utilize your services and in turn increase their profits as well
thereby answering their standard inquiry of "what's in it for me?"…(they're
funny that way…).
Remember,
this article is talking directly to business brokers …(OOPS!)
"Increased
profits through
Seller Financed Transactions"
Putting extra
cash in your pocket through
past, present and future seller financed Deals.
Every year business brokers across the country consummate transactions
where seller financing has been required. Most of these sellers are
entrepreneurial like your past and present clients, selling one business
to invest in another. The majority of these note holders eventually
have a need for the capital that's tied up in the note…either at
the time of sale or sometime down the road.
The Promissory Note
created when a Seller finances the sale of his business is a salable
asset that can be liquidated in a variety of ways helping a note holder
receive the cash he needs now versus sitting on years of smaller monthly
payments. In many cases assisting in the sale of the soon to be created
note can be the difference between a closed deal and one that falls
through.
Would you be surprised
to learn that you had the creativity at your disposal all these years
but didn't know it?
National Capital
Corporation, located in Scottsdale, Arizona is one of the premier business
note investment corporations in the United States. They are not lenders,
they provide capital through the use of existing or soon to be created
seller financed Promissory Notes when a seller carries the financing
on a business sale. Listen to what Ed Lisogar, President and CEO had
to say recently to a packed house of VR franchise owners at the VR convention
in San Diego, California.
"We help business
brokers close more deals every year by not only suggesting the best
way to structure a seller financed business note for eventual sale into
the secondary market, but by also demonstrating to the seller the different
options that are available once the note has been created. Most sellers
have an idea that these notes can be sold but are not aware there are
any options other than a full liquidation. Sellers are always surprised
when they see how creative we can get as far as providing exactly the
cash they require". According to Ed it is not necessary to sell
the entire note to pull cash out of future payments. In fact a full
liquidation of the note will provide horrendous discounts. "Because
the majority of business sales do not involve any tangible assets like
real estate, there is little security or collateral for the noteholder
other than taking the business back in the event of a default by the
new owner. This makes business note investment a risky proposition.
Additionally, time plays an important role in the market value for those
future payments. The longer into the future we have to wait for our
return on investment (i.e. a long note), the less valuable those future
payments are in the secondary market. The combination of time and risk
create large discounts. As a result a seller that insists on a full
liquidation, particularly if there's more than a few years left on the
note is generally shocked to learn that he's looking at about .60-.65/$.
There are, however, some attractive alternatives"
How does NCC's services
help the business brokerage community?
In many cases "creative"
financing is the difference between closed deals and months of time
wasted.
Eg. Bob and Judy
have a dry cleaning operation for sale. It's well established, in business
for ten years. The sale price is fair, the location is great and the
business has decent cash flow. It's also been listed for several months.
Why? Potential Buyers
did not have experience in this type of business. Additionally, they
have had spotty credit and only 15% - 25% cash down. Lending institutions,
SBA included, are tightening their belts and a borrower's qualifications
have never been more closely scrutinized. Result? More Buyers than ever
are asking Sellers to carry the financing. This seller, as is likely
the case with many of your sellers, would be willing to carry the paper
however the cash down they can reasonably expect a buyer to contribute
in a typical seller financed deal (20%) does not meet their present
cash requirements. The above Laundromat is selling for $200,000. The
seller has his eye on another business venture that requires approximately
$100,000. In order for a seller financed deal to make sense for him
he'd need a Buyer with 50% or $100,000 cash down. He may find one if
he waits long enough, but by the time his "white knight" rides
in with the $100,000 cash down the other business venture may be long
gone. As a result the seller has no choice but to hold out for an all
cash buyer. The business sits…and sits…and sits…
"We generally
find that very few sellers actually require 100% of their asking price
in cash at closing to satisfy their present cash needs" Ed states.
"Most sellers have a specific cash requirement from their sale
however that requirement generally exceeds the down payment that a prospective
Buyer has in hand. Our first question is always "How much cash
does the seller truly need from the sale". We generally find it's
equivalent to about 50%-60% of the asking price for the business. By
determining exactly how much is needed, we can generally supplement
the cash down the buyer does have through the use of the seller financed
note that's about to be created". This is accomplished through
a creative program Ed calls a Partial. "A partial is a simple assignment
of a certain number of future payments. The Buyer makes his monthly
payments to us for the number of payments assigned. Once those payments
come in the note reverts back to the seller and he now receives all
of the remaining monthly income. The seller can even repeat this process
should he require a lump sum of cash at a later date. This program is
helping business brokers close 4-5 more deals a year. The additional
income is substantial and the value our company brings to the table
is obvious."
Multiple pay
days for the broker.
The nice
aspect of the partial is that the seller can repeat the process several
times with the business broker getting paid each time. "For the
Seller it's like utilizing the seller financed note as their own personal
line of credit…" Ed says. "Just pull out the amount you
need now, and go back to the balance at a later date should you need
cash again in the future.
Brokers profit
from previously closed transactions as well
Every
franchise has closed deals in the past where the seller carried the
financing. According to Ed that's cash just waiting to be cultivated
in your office's filing cabinets. "Past clients that have sold
businesses through your company are prime candidates for many of your
present listings…" Ed says. The problem is that their cash
is tied up in the note they created when they sold with seller financing.
Ed's company offers a cost free program, paid for by his company, that
not only paints your company in a nice light, but also alerts past clients
to the cash flow service your association with National Capital can
now provide. "We continually put cash in the pockets of business
brokers nationwide through an informative, tasteful mailout program,
assembled and paid for by our company. We provide a proven, response
generating letter to your past clients that comes from you on your letterhead.
It lets your clients know that even though their business sale closed
months or even years ago, you are still available should they need you.
An unexpected letter like this is a terrific "service after the
fact" for your clients. We handle all aspects of the mailout including
the cost. More importantly National Capital Corporation pays a 2% referral
fee of the funded amount for any transactions closed as a direct result
of the mailout or verbal referral". As their investments hover
around the $100,000 range that's an additional $2,000 per deal going
right into your pocket.
Ed is quick to point
out however that the 2% referral fee (while substantial in itself) is
not the only reason to participate in the program. "Helping a client
get his cash out of a long term note now frees him up to review your
present listings. A seller with cash that has worked with you previously
could very well be your next buyer. More closings mean more commissions
in your pocket. All that's required from you is a little time assembling
a mailing list from past files. Think about the time, energy and cost
you presently expend in cultivating new leads. You have all the leads,
all the motivated buyers you could use just waiting for you right there
in your filing cabinets". Ed points out that many offices hire
high school students at minimum wage or have their receptionists going
through closed files to assemble mailing lists of past clients. "Pulling
addresses from successfully closed deals can provide thousands of dollars
in added referral and commission income to every franchise. All it takes
is a little initiative. Unfortunately a surprising number of brokerage
firms fail take advantage of our offer. I'm always surprised to hear
that to some brokers an hour per week is too much of an effort in return
for potentially thousands of dollars in added income".
Ed Lisogar is a
keynote speaker at several financial industry conventions each year,
is a noted author with two best selling manual/software publications,
is a regular contributor to several industry publications and periodicals
and is an Advisory Board member of a prominent secondary market web
site. An expert in secondary market acquisitions he can be reached by
telephone at 602.370.5670, fax at 707.885.0304 or by e-mail at ed@nationalcapitalcorp.com.
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Who's
"Hangin'" at the Forum?!
The Forum page at
NCC's web site is the place to "hang" to pick up the latest
tips, techniques and answers to questions relating to a variety of arenas
in your industry. You never who will be joining in on the conversation.
Have a question
about a deal you're working? Not sure if there's a market for certain
cash flows? Wondering what's the best way to find certain note types?
There's a new clearing
house for questions like these and ANYTHING you have to discuss at the
NCC "FORUM"! Post questions or comments on a variety of topics.
Join in on an ongoing discussion.
Respond to postings
from other brokers as well as investors. Share your experience with
your fellow brokers. It's all there for you at the "Forum".
(Go to the Forum now.)
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Interesting
Bloomberg Article on The Associates Financial
New York: Citigroup
Inc., the largest US financial services company,
said it cut ties with more than 3,600 brokers that arranged loans for
Associates First Capital Corp. unit, a consumer finance company that
has been accused of predatory lending practices.
The brokers, who
weren't employed by Citigroup, were dropped from the company's list
of approved agents for transgressions including not being properly licensed,
failing to agree to a Citigroup ethics code and not bringing the company
regular business, according to an internal memo sent to employees by
Robert Willumstad, head of the company's consumer group.
The 3,622 brokers
severed by Citigroup include about 1,000 who were suspended in April,
said spokeswoman Leah Johnson. The cuts represent about 64 percent of
the brokers retained by Associates, which was one of the top four mortgage
lenders to people who don't qualify for standard loans, according to
Inside Mortgage Finance of Bethesda, Maryland.
Lenders such as
Citigroup -- which is led by Chairman SanfordWeill -- have been accused
of charging hidden fees and levying high interest rates on so-called
subprime loans. The company has moved to diffuse criticism by cracking
down on its brokers and eliminating some
(Thanks to
D.J. Cunningham for submitting the preceding article to The Chase)
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Creating
the PERFECT Business Note…Possible?
Business notes are
arguably the highest risk paper out there. The lack of any tangible,
foreclosable assets typically results in a total write off when, God
forbid, they default. The yields set by the secondary market reflect
that result and in turn create substantial discounts. These discounts
are magnified when there is a significant amount of time remaining,
generally more than 3-4 years. In that scenario .50/$ to the seller
will not be unusual after you've deducted your fees.
Creating a business
note that is attractive to us for acquisition depends on a variety of
factors however let me hit the hot topics:
Credit: Buyer credit
must be strong. Typical minimum would be about a 650 FICO.
Seasoning: Generally
we'd prefer to see about 3-4 months of timely pay history to ensure
the Buyer knows what he's doing. Too many people have the wrong idea
about what "being the boss" is like and after 2-3 months of
arriving when its dark and going home when its dark, 9-5 is starting
to look pretty good after all.
Equity/Down Payment:
Again, typical requirement is about 30% cash, out of pocket down at
the time of sale (not borrowed or financed). No, "built up equity"
through seasoning is not the same thing, at least not in our eyes. Example:
A buyer contributes little to no down at closing. The seller brings
the note to you after one year and points to "all the equity"
the buyer has by virtue of the 12 payments made to date. While yes,
the balance has been reduced slightly and yes, technically the buyer
HAS some equity, the comfort level we're looking for by virtue of the
cash down shows us that the buyer has a significant cash commitment
to the business. Even after making a year's worth of payments, he STILL
has nothing invested as THE BUSINESS made the payments, the buyer didn't.
He could be there for TWO years, run into financial difficulty and walk
away. He's made a few bucks, it paid his bills but now he defaults as
he has nothing invested. The only thing he'll lose is his credit rating
which, unfortunately too many people care little about these days.
Personal Obligation
on the Note: For investments under $100K we require personal obligation
meaning the buyer has signed the note personally. On large notes we
can live with corporate guarantees as the buyers in these large deals
will typically have a D&B #, might be publicly traded, etc. so we
can verify the buyers financial strength. Tax returns, P&L's, etc
will be required from the Buyer. This is why its crucial that you make
sure a seller gets these items prior to the sale so that WHEN they decide
to sell the note they have them in their possession. Remember, the buyer
is not obligated to provide ANYTHING once the business sale is a done
deal. The seller can sell the note without the Buyer's permission but
that doesn't mean he has to cooperate...and they rarely do.
So, having considered
all of the above issues, what's the best way to structure it? Best case
scenario, again, for us would be fully amortized, five years, at 2-3
points over typical business lending rates of the day. Stay away from
balloons. Buyers often insist (and sellers go along with it) that they
do a long amortization to keep the payment lower with a short (3-5 year)
balloon. DON'T DO IT!! The reason there's so much seller financing in
this arena is due to the LACK of traditional financing. If that's true
(trust me, it's VERY true) who's going to finance that big balloon?
We generally will not buy a business note that has a large balloon (exceeding
30%-40% of the fair value of the business). If, however, you're presented
with a note after the fact (after its been created and somewhat seasoned)
and the balloon exceeds approximately 30% of appraised value, we'll
still likely quote only the remaining payments and leave the balloon
to the seller. We're simply telling you that, based on experience, we're
not confident that the buyer will be able to re-fi the balloon. In that
event we'll either have to foreclose or extend more time…we don't
want to do either.
With the appropriate
down discussed above, a fully amortized five year loan should create
monthly debt service that is more than affordable for the business.
Occasionally you may have to take it out to seven years. The payment
should not exceed 30% of the gross monthly income. If so, either the
buyer put too little down or the business oversold.
Lastly, due to the
high yields/high discounts that come with the typical business note
acquisition, pushing the partial will always be the best way for the
seller to go. Get his mind off of liquidating the entire note. Few sellers
will be amicable to a full quote anyway. Ask the seller if he's prepared
for .55/$...if not then lets stop wasting time discussing a full liquidation.
Emphasize that your services are best suited by SUPPLEMENTING the cash
he received at closing. Pull out just what he needs right now and retain
the lion's share of the note for future income. Best of all the seller
can always come back to the note later, should his financial situation
ever change and he finds he again needs a lump sum versus the smaller
monthly payments.
All underwriting
criteria is at www.nationalcapitalcorp.com and you can always e-mail
us with further question. Lastly, if you plan to make business notes
your cup of tea, read the reviews on The Business of Business Notes,
found at the Instructional Manuals
page.
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Fact
or Fiction? Frank discussion of Appraisals vs. "BPO's" by
Troy Fullwood, President, Pinnacle Investments, Arizona
Editors note:
The following is Part Two of a Two Part article written by Troy
Fullwood, President of Pinnacle Investments, exploring the issue of
appraisals vs. BPO's. The opinions expressed by the author do not
necessarily reflect the opinions of NCC and are provided as an open
discussion on this topic. Your responses are welcome and we encourage
you to post your own opinions, etc. on this article at the "Forum"
page at our web site, www.nationalcapitalcorp.com (Part One can be
read in the August 2001 issue of The Chase).
Well, the results are in. After writing part one of Fact or Fiction,
I felt as though the best way to decide whether or not what I was talking
about had any merit was to do a test on a property that I have in my
portfolio.
The property that
I chose was a 3/2.5/2 with a pool located in Arizona. The reason I chose
this property for my test is that it was bought below market value,
and there had been a complete remodel done on this home in the last
year. I also had two full US Property and Appraisals done on this home.
The first appraisal was done in November of 2000, at which time it appraised
at $145,000. The second one was done in June of 2001, at which time
it appraised at $153,000.
So, armed with this
information, I set out to discover the real truth about BPO's vs. Appraisals.
I contacted three different companies in my local area that did BPO's.
My first surprise was that the cost of doing a BPO ranged anywhere from
$75.00 to $200.00 with pictures. Keep in mind that I paid $300.00 for
a full appraisal from a national company.
Broker # 1 charged
$75.00. It took him 4 business days to complete the BPO. His value of
the property was stated at $122,000. When asked about how he established
this value, he said he based it on comps in the area along with the
tax rolls. He also let me know that this was not his main line of his
business. He main line of business was listing homes. Despite that,
he had no problem taking my money. When I brought to his attention that
the lowest priced sale in the area in the last 6 months was a $129,000
and a 2/2/2 (smaller home) He recommended that I seek the assistance
of an appraiser to establish value.
Broker # 2 charged
$120.00. It took him 9 business days and I received color photos of
the outside of the property. The value that he placed on the property
was $129,500. When asked how he established the value, he informed me
that he had sold several homes in the area in the last two years. He
also stated that his last sale in the area was over nine months ago.
Broker # 3 charged
the highest of all, $200.00. It took him 6 business days, and I received
what looked like a novel about the property. In his report he told me
everything about the property size, shape, color, location, schools,
shopping centers, freeway access, comps, taxes, neighborhood amities,
etc. His assessed value of the property was $136,000. This BPO was,
by far, the most impressive. Only one question still remained - How
is that he can still be 12% off on the value of the home. As he attempted
to explain how he arrived at the $136,000 value, He disclosed some very
important facts to keep in mind when comparing a BPO Vs Appraisal. He
stated that a BPO is designed to do a quick comparison of the subject
property based on the current sales in the area. When I asked him if
traditional lenders would use a BPO's to establish value on a piece
of real estate, he stated "highly unlikely". They are looking
for a much more comprehensive approach to establishing the value of
a piece of real estate.
Understand that
institutional note buyers typically have a margin of 10% (+ Or -) when
looking at the value of a BPO. None of the BPO's that I received would
have fallen into their margin, which in turn would have given them the
opportunity to change the pricing on this deal.
So, the question remains, which is a better way to establish the value
of a property; a BPO or an Appraisal?
I personally have
found that the best way to establish value on a piece of real estate
is through a full appraisal with interior photos from a national company.
By doing it this way I have found that when I sell a note it eliminates
any question of value that the buyer may have. Thus a win / win situation
is created for both the buyer and the seller.
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Have
You Looked at a Dollar Bill Recently?
Take out a one dollar
bill and look at it. The one dollar bill you're looking at first came
off the presses in 1957 in its present design. This so-called paper
money is in fact a cotton and linen blend, with red and blue minute
silk fibers running through it. It is actually material. We've all washed
it without it falling apart. A special blend of ink is used, the contents
we will never know.
If you look on the
front of the bill, you will see the United States Treasury Seal. On
the top you will see the scales for the balance -a balanced budget.
In the center you have a carpenter's T-square, a tool used for an even
cut. Underneath is the Key to the United States Treasury. That's all
pretty easy to figure out, but what is on the back of that dollar bill
is something we should all know.
If you turn the
bill over, you will see two circles. Both circles, together, comprise
the Great Seal of the United States. The First Continental Congress
requested that Benjamin Franklin and a group of men come up with a Seal.
It took them four years to accomplish this task and another two years
to get it approved. If you look at the left hand circle, you will see
a Pyramid. Notice the face is lighted and the western side is dark.
This country was just beginning.
We had not begun to explore the West or decided what we could do for
Western Civilization. The Pyramid is uncapped, again signifying that
we were not even close to being finished. Inside the capstone you have
the all-seeing eye, and ancient symbol for divinity. It was Franklin's
belief that one man couldn't do it alone, but a group of men, with the
help of God, could do anything.
"IN GOD WE
TRUST" is on this currency. The Latin above the pyramid, ANNUIT
COEPTIS, means "God has favored our undertaking." The Latin
below the pyramid, NOVUS ORDO SECLORUM, means "a new order has
begun." At the base of the pyramid is the Roman Numeral for 1776.
If you look at the right-hand circle, and check it carefully, you will
learn that it is on every National Cemetery in the United States. It
is also on the Parade of Flags Walkway at the Bushnell, Florida National
Cemetery and is the centerpiece of most hero's monuments.
Slightly modified,
it is the seal of the President of the United States and it is always
visible whenever he speaks, yet no one knows what the symbols mean.
The Bald Eagle was selected as a symbol for victory for two reasons:
first, he is not afraid of a storm; he is strong and he is smart enough
to soar above it. Secondly, he wears no material crown. We had just
broken from the King of England.
Also, notice the
shield is unsupported. This country can now stand on its own. At the
top of that shield you have a white bar signifying congress, a unifying
factor. We were coming together as one nation.
In the Eagle's beak you will read, "E PLURIBUS UNUM", meaning
"one nation from many people." Above the Eagle you have thirteen
stars representing the thirteen original colonies, and any clouds of
misunderstanding rolling away. Again, we were coming together as one.
Notice what the
Eagle holds in his talons. He holds an olive branch and arrows. This
country wants peace, but we will never be afraid to fight to preserve
peace. The Eagle always wants to face the olive branch, but in time
of war, his gaze turns toward the arrows.
They say that the
number 13 is an unlucky number. This is almost a worldwide belief. You
will usually never see a room numbered 13, or any hotels or motels with
a 13th floor. But, think about this: 13 original colonies, 13 signers
of the Declaration of Independence, 13 stripes on our flag, 13 steps
on the Pyramid, 13 letters in the Latin above, 13 letters in "E
PLURIBUS UNUM", 13 stars above the Eagle, 13 plumes of feathers
on each span of the Eagle's wing, 13 bars on that shield, 13 leaves
on the olive branch, 13 fruit, and if you look closely, 13 arrows. And
for minorities: the 13th Amendment.
Why don't we know
this?" Your children don't know this and their history teachers
don't know this. Too many veterans have given up too much to ever let
the meaning fade. Many veterans remember coming home to an America that
didn't care. Too many veterans never came home at all.
Tell everyone what
is on the back of the one dollar bill and what it stands for.
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Speaking
of "Dollar Bill"…
Former President
and First Lady Bill and Hillary Clinton received ten million and eight
million dollars respectively for their collective memoirs.
That's a lot of
money for two people that for eight years couldn't remember a thing.
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Broker
Question of the Month
Every issue
the staff at NCC select a question from the NCC Forum to share with
our newsletter subscribers. Got a question, comment, story or experience
to share? Post it at the NCC Forum.
This issue's posting
is by Don Pinger who wrote:
I am in the process
of starting a business selling public internet access kiosk. I will
be selling them in groups of 2 or more @ $12,950 each.
I would like to
be able to write my own sales finance contract because I believe that
I could sell more kiosk that way. Once the contract has been written
i would like the option of either holding it for a while and selling
it or just selling the contract right away.
What other information
would you need to know in order to decide if your interested in buying
this paper?
Sincerely,
Don Pinger
Response By
Ed Lisogar:
Individually they
would be a little on the small side. However, if you sell quite a few
there might be an opportunity to pick them up in bulk.
My concern is the
business type and what appears to be a lack of anything tangable as
collateral. As a Kiosk (in a mall?) there's obviously no RE involved.
Therefore the buyer's equity (out of pocket cash down payment) is crucial.
Additionally, Buyer's credit history will be paramount (which is why
the notes must be personally g'teed).
Typically a business
must be open and operating a few years for us to be interested in a
seller financed note secured by that business. That might be the biggest
hurdle of all particularly as internet related/dot com businesses are
not exactly high on the list of attractive business ventures these days.
Lastly, not sure
what you thinking is regarding secondary market pricing for business
notes but .50/$ is not unusual. If you are looking for someone to take
these off your hands at PAR or at minimal discounts that might be the
end of the conversation right there. We do "finance" buyers,
albeit through the liquidation of recently created, seller financed
paper. The discounts are significant.
All underwriting
criteria is at our web site incidentally.
Look forward to
hearing from you.
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A
Little Good News for a Change…
Thank you to Warren
Perry, our good friend "Downunder" for pointing out the positive
side of the 9-11 tragedy.
Some good news
from all of this
By now everyone
has been hearing the death toll rise and reports of
the destruction from the terrorist attacks on the US. These were
deplorable acts that we will never forget. But now is a time to look
at the other side of the numbers coming out of New York, Washington
and Pennsylvania. The sad but somewhat uplifting side that the mainstream
media has not reported yet - the SURVIVAL rates and some positive news
about the attacks.
*** The Buildings ***
* The World Trade Center
The twin towers of the World Trade Center were places of employment
for some 50,000 people. With the missing list of just over 5,000 people,
that means 90% of the people targeted survived the attack. A 90% on
a test is an 'A'.
* The Pentagon
Some 23,000 people were the target of a third plane aimed at the Pentagon.
The latest count shows that only 123 lost their lives. That is an amazing
99.5% survival rate. in addition, the plane seems to have come in too
low, too early to affect a large portion of the building. On top of
that, the section that was hit was the first of five sections to undergo
renovations that would help protect the Pentagon from terrorist attacks.
It had recently completed straightening and blastproofing, saving untold
lives. This attack was sad, but a statistical failure.
*** The Planes ***
* American Airlines Flight 77
This Boeing 757 that was flown into the outside of the Pentagon could
have carried up to 289 people, yet only 64 were aboard. Luckily 78%
of the seats were empty.
* American Airlines Flight 11
This Boeing
767 could have had up to 351 people aboard, but only carried 92. Thankfully
74% of the seats were unfilled.
* United Airlines Flight 175
Another Boeing 767 that could have sat 351 people only had 65 people
on board. Fortunately it was 81% empty.
* United Airlines Flight 93
This Boeing 757 was one of the most uplifting stories yet. The smallest
flight to be hijacked with only 45 people aboard out of a possible 289
had 84% of its capacity unused. Yet these people stood up to the attackers
and thwarted a fourth attempted destruction of a national landmark,
saving untold numbers of lives in the process.
*** In Summary ***
Out of potentially 74,280 Americans directly targeted by these
inept cowards, 93% survived or avoided the attacks. That's a higher
survival rate than heart attacks, breast cancer, kidney transplants
and liver transplants - all common, survivable illnesses.
The Hijacked planes were mostly empty, the Pentagon was hit at it's
strongest point, the overwhelming majority of people in the World Trade
Center buildings escaped, and a handful of passengers gave the ultimate
sacrifice to save even more lives.
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..And
Finally
Next time your having
a tough day in the old cash flow industry just remember, things could
be worse…MUCH worse. (Taken from a Florida Newspaper)
A man was working
on his motorcycle on his patio and his wife was in the kitchen. The
man was racing the engine on the motorcycle when it accidentally slipped
into gear. The man, still holding onto the handle bars, was dragged
through the glass patio doors and along with the motorcycle dumped onto
the floor inside the house.
The wife, hearing
the crash, ran into the dining room and found her husband lying on the
floor, cut and bleeding, the motorcycle lying next to him, and the shattered
patio door. The wife ran to the phone and summoned the ambulance.
Because they lived
on a fairly large hill, the wife went down the several flights of stairs
to the street to escort the paramedics to her husband.
After the ambulance
arrived and transported the man to the hospital, the wife returned home,
uprighted the motorcycle and pushed it outside. Seeing that gas was
spilled on the floor, the wife got some paper towels, blotted up the
gasoline, and threw the towels in the toilet.
The man was treated
and released, returning home later that day.
Upon arriving home,
he looked at the shattered patio door and the damage done to his motorcycle.
Despondent, he went to the bathroom, sat down on the toilet and smoked
a cigarette. Finishing the cigarette, he flipped it between his legs
into the toilet bowl while seated. The wife, who was in the kitchen,
heard the loud explosion and her husband screaming. She ran into the
bathroom and found her husband lying on the floor. His trousers had
been blown off and he was suffering from burns on the buttocks, the
back of his legs, and his groin.
The wife again ran
to the phone to call the ambulance. The very same paramedic crew was
dispatched and the wife met them at the street. The paramedics again
loaded the husband on to the stretcher and began carrying him down the
long flight of stairs to the street. While they were going down the
stairs to the street accompanied by the wife, one of the paramedics
asked the wife how the husband had managed to hurt himself this time.
She told them and
the paramedics started laughing so hard, one of them slipped and tipped
the stretcher, dumping the husband out. He fell down the remaining stairs
and broke his arm.
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