Most successful businesses find a niche in the marketplace. They get very good at their niche and this allows them to compete and become profitable.
The business of buying owner carryback notes is similar. Most notebuyers carve out an area they like to operate in. Experience has been their teacher.
As a note broker, my job is to develop relationships with these buyers, discover their likes and dislikes, and then match a seller to the right buyer.
Here is an example of a buyer who has carved out a particular niche in commercial real estate notes that has worked out very well for them over the years. They focus on Class C properties. A Class A property is a big office building in a major city such as Los Angeles or New York. A Class B property is an apartment building or mid size office building. What’s a Class C property?
A Class C property is a church, an auto repair shop, a smog shop, a motel, a gas station, a junkyard. A Class C property may be an older property located in a transitional area. It may have remaining economic life issues. It may have environmental issues. It’s “use” may change over time. Consequently, bank financing may be difficult or impossible to obtain. The seller of one of these properties will typically have to carry some or all of the debt.
Many note buyers will not purchase notes secured by these types of properties, either due to limited experience(usually bad) or a lack of comfort with all the associated issues. Without question, these properties fall into a special niche.
I am fortunate in that I have developed a relationship with a particular buyer whose niche is these very Class C properties. They have been buying these types of notes for years and have an expertise that is uncommon in the note industry. They are always looking for a Junkyard Dog note. If you are the holder of one and looking to sell, help may be available. Contact me and let’s see if your Junkyard Dog can find a new owner.
