Posted by Dirk Roach on May 12, 2000 at 11:10:14:
Hi Mary Ann,
You are doing a SUPER job! You’ve established a relationship with the PM. You done some market research and you have read Lonnie’s Books.
Alright!!!
Okay, Lonnie typically likes the three “s” deal, short (36 months or so), Sweet (yield which is good enough to him, and outstanding to everyone else), and Simple (not a lot complications).
Okay So lets crunch some numbers:
10 K Sales Price
9K Present Value (we’ll take 1k as a downski)
12.75% Interest (the Lonnie Industry Standard)
36 Mth Term
302.16 Payment
Gives us a
82.33% Yield (quite a bit better than a savings account)
The above scenario looks pretty cool to me, however the payment maybe a little high so lets see what happens when we stretch out the term a little
9k PV
12.75% Int
48 Mth Term
$240.00 Payment
66.73% Yield
See your yield goes down because it’s a longer term, still a doable deal though.
Or we could increase the sale amount. Which sounds cool, (and possibly is) but with Pro’s comes Con’s, namely the sales tax will increase as will the insurance ( a little)
Okay let’s look at these numbers:
13K Sales Price
12K Present Value (again we’ll take a grand as a downski)
12.75% Interest
60 Mth Term (again we’ve stretched it out to the longest limit that I, personally like, (on singlewides I don’t like more than 5 year notes)
$271.00 Payment (again only 20 bucks more than your PM’s suggestion)
79.73% Yield
Now this is yet another option. But notice, yes we did increase sales price, but to off shoot that we had to increase our term.
So as you can see you’ll have to work with your numbers to fit your buyer.
Anyhow I think your on a good track.
Good luck and let us know how it goes,
Dirk