Re: Any suggestion on how to sell MH’s in park? - Posted by soapymac
Posted by soapymac on June 09, 2000 at 10:34:09:
Not having become involved with a land contract situation, what I am suggesting may have more holes in it than cheesecloth, but here goes:
Were the MH’s included as part of the Land Sales Contract? And the bank is doing both the land sales contract financing AND holds the balloon note?
Is the Land Sales Contract being paid from the “dirt” rents?
The ballon note: do you have the contractual ability to apply monies from time to time to reduce the principal of the balloon? Is the interest on the balloon figured as simple interest or compound interest?
Now to my idea: go to the bank and ask them if they would allow a substitution of collateral. Explain that if they would allow you to do so, you would sell the MH’s and let them do the financing of the sales in exchange for a reduction on the balloon. You could also ask them to apply any sales to the land sales contract to pay that off (run the numbers on this and make sure there is no prepayment penalty for paying the contract off early.)
What you in essence want to do is this: you have a property on contract. If the bank will allow you to “improve” the property by doing the “Lonnie deal,” would they accept the VALUE you’ve added to the property and allow you to give them that value (the servicing of the loans) to reduce your contract/balloon note obligation?
Worst case, the answer is no. That leaves you right where you are for three years. When the balloon comes up, refinance, then sell the “Lonnie’s” and collect on the dirt. Chances are you’ll sell the “Lonnie’s” maybe two or three times. Give the bank recourse back to you so you can sell them again.
Maybe I’ve not explained this thoroughly, but I can see in my mind that this could be an exceptional “cash cow” for you. I’ll leave it to others to fix my cheesecloth of an idea.