Posted by kevin on October 03, 2004 at 09:58:37:
thank you to the people who gave helpful answers. the 1st 1 was an ass so I didnt read the rest till just now. some of the answers are no longer available so I didnt get them.
I now have 2 offers of $5,000 down, so I’m going to have to look more seriously into this.
thanks again to those who had a clue and didnt try to fake it with negative responses.
can I offer financing on a home I owe money on? - Posted by kevin
Posted by kevin on September 21, 2004 at 09:25:26:
I am selling our 95 14x80 Clayton for $8,800-which is $1,000 over payoff and about half what the other thailers in my park are going for.
I’m not opposed to financing it for $2,000 down but I’m wondering what to do about insurance and the bank who holds the note. Obviously neither would approve of this.
What would you do?
thanks for any friendly responses
Re: can I offer financing…(long) - Posted by Lin (OR)
Posted by Lin (OR) on September 22, 2004 at 11:10:10:
Kevin,
Keep reading on this site and you’ll get some good ideas for how to make this happen. You’ve already been given some good advice, and if it needs fleshing out, search the archives for related posts. You can also order the book “Deals on Wheels” from this site, and it’ll be at your door in a week. It’s worth its weight in gold.
I know you said you don’t want to rip anybody off, but consider that you’re taking a risk by providing financing to your buyer or doing a lease with a purchase option. You’re entitled to compensation for that risk. If you’re not comfortable charging double, like you said most of the trailers in your park were selling for, figure out what you are comfortable with.
I think once you start doing the math for how many months it would take to get somebody out of your home legally, if they stopped paying you multiplied by the monthly cost of insurance, space rent, and utilities, plus repairs to the place once they were out, plus all the costs associated with getting a new buyer (space rent, ads, utlities, and time out of your day to show it and screen buyers) you’ll find that close to double what you owe isn’t greedy. It just makes good business sense.
Best of luck to you!
Lin
Re: offer financing on a home I owe money on? - Posted by Lyal
Posted by Lyal on September 22, 2004 at 09:56:45:
Kevin,
Why do you assume the bank would not approve of this. Is there a “due on sale” clause in the note. In any event, if you are still named on the loan, you are still on the hook for the payments.
I sell on this basis all the time (although my bank is aware beforehand that this is my intention). I buy the home with a commercial loan from my bank and resell on a “Contract for Delivery of Title” to someone with less than stellar credit. They get insurance in their name with me listed as lien holder and my bank listed as additional insured.
I’d at least ask the bank what they thought. Remind them that you will still be making the payments (have the buyer pay you and you pay the bank) and the home will always be insured.
If you do this against their wishes, be aware that they can be hard-headed about calling the loan due.
All the best, Lyal
Re: can I offer financing? - Posted by Jeff_AL
Posted by Jeff_AL on September 22, 2004 at 08:33:30:
Kevin:
Why not do a lease/option? That way you are still the owner. I can’t see the bank having a problem as long as you make the payments. It is your property, and as long as you do not default on the payments, it should make no difference to the bank. Does your bank agreement have a clause stating rentals not allowed? If it does that is very unusual. As for the insurance, the bank wants to be protected from their loss. In this case their loss incase of fire, etc. would be the structure and not the tenants belongings. Change your policy to cover the structure and a couple of thousand for clean-up and removal in case there is a total loss. Then the tenants can get a renters policy until it is paid off. Make sure that your policy has some liability coverage.
It is much like a single family rental with the bank. The benifit to a lease option is that if the tenant stops paying, you can evict as opposed to repossesion if sold outright. This takes less time in most states and you will be able to get your asset performing again.
Looke at www.ernesttew.com and he has some EXCELLENT forms for lease/option. Do a triple net lease that will make the tenant responsible for the repairs, taxes, etc. ALso, with a lease option, you can deduct the interest that you pay on your loan and any depreciation allowed. Email if you need more details. Most people here will try to help, ignore the jerks.