Posted by Steve-WA on August 13, 2003 at 17:01:50:
you take the hit all at once anyway. You will pay tax on your profit, interest or no interest. Unless you’re a Hyre-ite, and subscribe to the “FMV of the note” method of cash accounting. In fact, a 0% interest note would have a lower FMV, so you would take LESS of a tax hit the first year.
Another advantage of 0%.
No year end 1099s.
Another advantage of 0%
hmmmmmmmmmmm
Bought 2 homes for less than $500! - Posted by JB -Fl
Posted by JB -Fl on August 10, 2003 at 11:09:52:
I have previously rehabbed houses, but was also interested in MH. Drove through a MH park and talked with the manager. Park has swimming pool (just resurfaced) and plans to “upgrade” with gate, etc. The PM had partially read DOW, so knew what I was talking about.
He had deserted homes in his park, and showed me some. I flat turned down 2, which he is going to have junked, but I bought 2 for less than $500 (together) to fix and re-sell. He just wants more rental income, but has given me 2 months free rent while I try to move these homes.
First 1979 Comm (what is the make, anyone?) 2/2. It took 2 truckloads to get the trash out, but no bugs! AC works, once I found the wire that was unattached. Washer and dryer are there, don’t know if they work yet. Fixing floor now, and need to re-carpet and put linoleum, outside needs painting. Have already re-sealed roofs on both, although there were no apparent leaks.
Second is 1985 SAND (make, anyone?) originally had 3 BR, but they removed wall, and made giant living room. Will put wall back. Needs air conditioner and other cosmetic things.
In your opinions, having done these deals, what would be good prices to ask for them? I am planning to Lonnie-deal them, and the PM is fine with that. Lot rent is $295/month. I had been thinking $5,000 and $6,000, but after reading some of the posts here think maybe that is not enough.
Thanks for any answers! This lot has others he is willing to sell me, and I have already talked with PM in two others in the area, and they are ALL willing to let me in!
Re: Bought 2 homes for less than $500! - Posted by Dr B (OH)
Posted by Dr B (OH) on August 12, 2003 at 19:39:29:
JB,
Congrats on the deals. THe '79 is probably a Commodore don’t know about the '85. So far, no one has cared about the make and model of my deals although they are frequently advertised that way by others.
Steve
Re: Bought 2 homes for less than $500! - Posted by chris ny
Posted by chris ny on August 11, 2003 at 11:34:18:
this is just my opinion, but if i was dealing w/ a buyer who would need financing, i would tell them that i was running an august special. i would give them zero percent finacing with $1000 down and a payment of just $200 a month for 36 months. mention that this plus the $295 lot rent is still probably cheaper than they could rent. make sure they know how good a deal w/ 0% financing is. this works all the time for me and i bet it will for you too. good luck.
chris
Remember DOW - Posted by Doug (Alabama)
Posted by Doug (Alabama) on August 10, 2003 at 19:24:20:
Price shouldn’t be your first decision. Remember DOW’s talked about what the buyers are looking for:How much down and how much a month. If you satisfy those two needs the total price is secondary.
Good Luck,
Doug
Re: Bought 2 homes for less than $500! - Posted by Oliver
Posted by Oliver on August 10, 2003 at 14:43:10:
Sounds like you got a pretty good deal, and more importantly, have found a pretty good PM.
In response to your question, I’ve read enough posts here to anticipate a response.
It’s not how much they’re worth, but rather, how much you can get for them. Have you been checking out the market in your area?
If you have a 1985 in decent condition, with appliances, and 3 bedrooms – you can do better than $6,000 though. Especially if you’re going to finance it yourself.
Re: Bought 2 homes for less than $500! - Posted by Lyal
Posted by Lyal on August 12, 2003 at 07:36:17:
Chris,
Why would you not charge interest? You’re cheating yourself out of dollars if you don’t. Also, if you ever run out of cash and find someone who would consider investing in your business (buying partials??) the discount you’d have to give would be harsh.
I set a price that is top of the market, if they don’t like it too bad. My focus is on “affordable payments that will leave you grocery money” and I have great success with that approach. The interest rate is rarely a concern. We agree on the price, down, and payment and the term is whatever the calculator spits out.
All the best, Lyal
you stole my thunder! - Posted by Phil Pelletier
Posted by Phil Pelletier on August 11, 2003 at 20:03:38:
Man, you guys are getting good. I NEVER charge interest when I hold a note. I just try to get at least $10,000 for everything I sell. That comes out to about $250/month for 36 months with $1,000 down. I tell everyone “Zero Interest” and they flock to the phone. These people are used to getting nailed with interest payments. They LOVE the no interest contract, if only for the bragging rights at the bar on Friday night. I haven’t had a single person ever argue price with me when I mention a zero interest contract. They just say, where do I apply?
Phil Pelletier
PS- Most are turned down, but that’s another story!
Re: Bought 2 homes for less than $500! - Posted by chris ny
Posted by chris ny on August 19, 2003 at 16:03:24:
lyal, i deffinatly see what you are saying, there are some drawbacks to using the 0% interest. but, like tony was saying, i don’t offer it w/o jacking up the price a little. in my area, it seems that a lot of my people don’t pass the parks credit checks and there is just something about that 0% that makes the phone ring. also, i love the “grocery” line, i can’t wait to use it.
chris
Re: Bought 2 homes for less than $500! - Posted by Tony-VA/NC
Posted by Tony-VA/NC on August 12, 2003 at 08:08:10:
Lyal,
I disagree that money is being lost by not charging interest. The manipulation of the other terms allow the Lonnie dealer to receive the same amount of cash, just more (or less) in the form of principle payment vs. interest payment.
The following link is to the “Interest Rate Illusion” post I wrote that detailed my reasoning.
http://www.creonline.com/mobilehomes/wwwboard4/messages/20281.html
I do agree with you that an interest rate is important in the paper end of the business and that rate needs to be what investors expect to see or flags are raised. Lonnie’s “industry standard” seems to fall into that line. I am also told by Squire Hyre that the IRS can impute an interest rate if they so choose.
Re: you stole my thunder! - Posted by Karl (Oh)
Posted by Karl (Oh) on August 12, 2003 at 14:01:51:
I also get no arguments on price, and I charge 12.75%.
Karl Kleiner
Re: you stole my thunder! - Posted by Lyal
Posted by Lyal on August 12, 2003 at 07:37:13:
Phil,
Please read my reply to Chris above.
Lyal
Re: Bought 2 homes for less than $500! - Posted by Phil Pelletier
Posted by Phil Pelletier on August 12, 2003 at 13:40:32:
I agree completely regarding interest rates. As a seller, you can receive the same payment (or greater in some cases) without charging interest, because the buyer is not always looking at price when buying a home, he is looking for a payment he can afford. The home I sold for around $10,000 at no interest could never sell for that same sale price with 12% interest. The payment would be too high. The home was a small two bed singlewide from 1977. By all rights the home should sell for about $7,000. I paid about $3,000 ($1200 for the home and about $1800 for the rehab. TOO MUCH, I know, I know!). I sold it for $10,000 because it was a ZERO interest contract. It seems you can get top dollar for these places if you don’t charge interest.
With regard to selling a partial pay stream, I look at it this way: As long as you buy the home correctly, the discount you need to give in order to raise some cash selling the note is livable. The zero interest contract protects the investor, because NOBODY walks away from a zero interest contract. However, when someone is paying $250 a month for three years and they still owe $7,000 on a $10,000 note, they may bail out because they see no light at the end of the tunnel.
I’ll stick to the zero interest deals. They are just so easy for a dork like me.
Phil Pelletier
Re: you stole my thunder! - Posted by Chuck
Posted by Chuck on August 12, 2003 at 16:38:19:
I charge the the “normal industry rate.” 
I’m happy
But K! - Posted by Steve-WA
Posted by Steve-WA on August 12, 2003 at 14:19:32:
Karl, didn’t you hear? Rates just jumped up!
Time to hit 13%!
Re: Bought 2 homes for less than $500! - Posted by Mark
Posted by Mark on August 13, 2003 at 16:32:59:
Phil:
What about tax implications?
If you charge more for MH, but at zero interest, you take the tax hit all at once?