Thinking of diversifying into business note investing? This ain't your grandma's real estate note. David Barnett joins us to expose the real risks of buying paper backed by businesses. Forget passive income dreams; this is a hands-on (or hands-off-and-lose-everything) game. Buckle up, buttercup, because we're diving headfirst into the due diligence disasters and non-compete nightmares that await the unsuspecting note investor. We're serving up a healthy dose of reality – this episode will have you questioning every "opportunity" landing in your inbox.
- Tangible vs. Ethereal Collateral: Real estate notes? Houses you can touch. Business notes? Goodwill...and maybe a delivery truck with a bank lien. See the difference?
- Subordinate Liens = Subordinate Rights: Think you're calling the shots? An SBA loan ahead of you means you're just along for the ride.
- Non-Compete Clauses: Worthless Paper? Learn why that non-compete might not be worth the paper it's printed on, and how a vengeful seller can still ruin your day.
- Financial Statement Fantasies: Those P&Ls? Probably fiction. Discover the accounting shenanigans that can turn a profitable business into a money pit overnight.
- The "Expert" Fallacy: Thinking of stepping in to run the business yourself? Unless you're an industry whisperer, prepare for a crash course in value destruction.
- Until Death Do You Part: Business Notes are not all cashflow and dreams. David shares why buyers need to be wary of these types of investments unless they are familiar with the business and ready to step in and help.
Let's be honest: buying business notes is not for the faint of heart. It's a high-stakes gamble where the odds are often stacked against you. While there are opportunities to profit, they are buried beneath layers of risk, complexity, and potential deception. If you're not prepared to roll up your sleeves, get your hands dirty, and potentially lose it all, then walk away. Your portfolio (and your sanity) will thank you. Remember, note investing in all assets can be tough so get the right education and don't just take some "experts" advice!
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