Posted by Dave Swett on February 06, 2001 at 17:04:11:
Hi Debra, Obviously, I am missing 80% of the detail on your deal, but I think that you are ignoring the income from the two MH’s. In Maine, where I live during the summer, a MH on a lot rents for about $450 or so a month including the $100 or so lot rent. That is a gross of $900 less taxes and insurance, say $100 gives you $800 per month for the five years.
This kind of income will amortize a $37,000 loan. Doing the reverse, if I remember the numbers, you had a deal of $21,000 with $5k down or a loan of $16k at 10%. At $800, this loan will be totally amortized in 19 months–a year and a half. Borrow, bum or steal the $5K–go back and negotiate less, say $2K and borrow it on your credit card or Aunt Tillie.
You have two el cheapo trailers ala Scruggs techniques. I don’t understand why you want to move them out. You are buying them for almost nothing. Clean them up and sell them for $8-10K each. Two times $10k equals the cost of your whole deal. Use the proceeds of the trailers to pay off your owner finance and your project will be free and clear. The lot rent of $200 per month continues forever. What could be better?
My observation is that it is almost impossible to move the el cheapo trailers cuz they will fall apart. Also, tho I have not personally experienced, Scruggs says that the kind of people who buy the el cheapo eventually move on to another life experience cuz they are so unstable and can’t sell the el cheapo trailer. Then they come back to you and you forgive the debt, give them $500 to leave the place clean without trashing it and then you re-sell it for another $10K. Lonnie talks about this idea often in his books.