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       The difference between a leader in the note industry and a loser is that the leader will be marketing and making calls even when he or she is down in the dumps.

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 President's Corner

       You can have a great degree from a prestigious university, a beautiful office chocked full of creative awards but, at the end of the day, your note business is judged the same way any other business is: Did it make money or did it lose money? If you can't answer this question very quickly, then you can't tell the difference between success and failure.

          So why should something as mundane and ordinary as numbers be of interest to a creative note professional? Here are at least two reasons: First, most note businesses fluctuate in volume and profitability. If you're not able to build reserves and put something away during the good times, you won't survive the down times. Second, if you ever want to borrow money, banks don't lend you money because you have a winning smile. They take numbers quite seriously, so if you ever want to work with them, you better too. Numbers are serious things, seriously.

Remember, Success Demands Action! Keep on marketing, it’s going to work! TWITA!

Question of the Week

Q - Hi Jeff,

          I really enjoyed your newsletter this week. I have a question about taking a "back end" or "tail end" position in a deal you discussed in your Feature Article recently. I understand the concept and have actually done a few of these transactions; however, I'd like to know how you secure your back end interests in the deal? I have heard a few horror stories about note brokers who have done these back end deals with investors or funding sources and at some point the investor/funding source either 1) goes out of business, or 2) dies and the estate or new investor who manages the assets or takes over he assets do not recognize the note broker's back end equity position and forces them to engage in litigation. How do you personally mitigate these worst case scenarios and safe guard your tail end interests?     ~ Nic 
 

A - Hi Nic!

          Great question. The way I look at the back ends that I have is that I have already received a commission on the transaction and anything that comes to me in the future is gravy. With that said I have had my share of lost back ends. To prevent this from happening I follow up every year with the investor and ask how it's going. 

          Additionally, when the investor closes the initial purchase transaction I ask them to file and record the attached "Request for Notice" document at the same time they record their assignment of the note.

          This way whenever the note is transferred, pay's off or goes into default I am supposed to be contacted. Now this is not a fail safe depending on the title company or real estate attorney (if any) searching the records when these things happen there is still a chance we will not be contacted. At least we are trying to be proactive to announce to the county that we still have a stake in the note.

          The investor does not have to record this for you. And if they do not you can always send it to the county recorder to record it yourself if you like. Either way, I take a day or two out of my summer every year and personally follow up on all of my back ends. Hope this helps! TWITA!                                                         ~ Jeff

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