Help with note please? - Posted by Todd (AZ)

Posted by Todd(AZ) on June 07, 2006 at 14:17:43:

Family park, 3 weeks, Not usually that large but never under $1,000. Todd(AZ)

Help with note please? - Posted by Todd (AZ)

Posted by Todd (AZ) on June 06, 2006 at 21:39:19:

Hi friends, Sold a mobile tonight: $5,000 down, finance $6,500, 12.75%, $250 a month, 30.59 months. Therein lies my “problem”, the 30.59 months. I remember Lonnie talking about this somewhere but I can’t seem to remember what to do with this .59 of a month so the note looks clean and is a quality note. I’d like to keep the sales price, interest rate, and payment exactly as it is if possible. Sounds impossible to do without changing something. I’m typing it up as we speak. Any ideas? Thanks, Todd (AZ)

Re: Help with note please? - Posted by Jordan (CA)

Posted by Jordan (CA) on June 07, 2006 at 12:48:28:

I’m curious, Todd. What size and year is the MH? Did you have to do any fix-up? How much did you buy it for? How much is the lot rent?

Calif. mobiles are pretty highly priced.

Re: Help with note please? - Posted by hsschwar

Posted by hsschwar on June 07, 2006 at 10:21:11:

30 payments of $ 250, leaving a balance of $ 146.38 for the 31st payment.


Re: Try this - Posted by Lonnie

Posted by Lonnie on June 07, 2006 at 07:07:22:

Maybe this will help. It?s an excerpt from my ?new? book. (Looks like it will be an old book before it gets published).
Best wishes,

Make It Easy–Keep It Simple

One of the things I?ve discovered in dealing with people who live by the ?How much down, how much a month? mentality, is the fact that they like everything to be easy and simple. It?s much easier for that type person to make a payment of $150.00, or some even number, than a payment of $149.26. So I?ve often been able to structure a note which turns out to be better than it would have been, had I used odd numbers, as in our previous example. Let?s do another example so you will understand my point.

We see that if we received 41 payments, we would be getting $149.26 instead of $150. But rather than drop the payment amount to $149.26, I would re-enter the numbers using 40, instead of 41 as the number of payments. Then I would solve for the PMT. By doing that, our chart shows us the payment would be $152.28, instead of $149.26. So how can we make it better, yet still keep it affordable for Charlie?

Since Charlie is only interested in ?How much down-How much a month?, he isn?t really concerned about what interest is being charged, as long as he can afford the monthly payments. And remember, Charlie is the type who likes things simple and easy. So rather than make the payment an odd figure ($152.28), why not keep it simple and make it a nice round number of $155.00. Check the following tables to see how the figures will look at different rates and payment amounts.

40 Payments @ 12%

40 1 -5,000 152.28 0

Since we don?t want to work with an odd payment amount, we punch the calculator buttons again, scratch our head a couple of times, punch the buttons again, and then say to Charlie, ?If we make it 40 months, the payment would be an even $155.00. Would that work for you??

Of course it will, that?s only $5 difference. And Charlie is probably used to paying 18% on his credit cards, so 13.12% looks real good. Also, when he writes the check every month, or gets a money order, it?s easier for him to remember what the payment is. So by tweaking the numbers you can make a good note even better, and still have a happy buyer.

40 Payments @ 13.12 %

40 13.12 -5,000 155.00 0

So again, if you need to change the figures, try to decrease the number of payments, and increase the payment amount to a round number. But don?t make the mistake of trying to get your buyer to agree to pay more than they can afford. If you do, it will be just a matter of time until they won?t be able to make the payments, and you will then have to re-structure the loan.

flexibility - Posted by JD (IL)

Posted by JD (IL) on June 06, 2006 at 23:25:06:

TValue’s a great program… $120 Will do all this for you.

I avoid the extra pmt personally by solving for the interest rate or the sale price after I set up an even number for pmts… 300 - 5 years, then I start to figure out an interest rate and sale price that works for that. People are used to seeing odd numbers, and I like receiving the even checks.


easy peasy - Posted by Steve-WA

Posted by Steve-WA on June 06, 2006 at 22:03:00:

that’s what my 8 yr old says to me: easy peasy, dad.

run the amort schedule, and tell the buyer that their last payment (31st) will be less than a full pmt - whatever the sched says

if you need a amort spreadsheet, LMK - but they’re out there everywhere

Re: Help with note please? - Posted by Adam (IN)

Posted by Adam (IN) on June 06, 2006 at 21:44:50:

ive had this exact situation a number of times and personally i keep the PV, I, and N a clean # and make the payment w/ a cent amount ie. $250.73…this also helps in keeping track of deposits made to ensure a “paper trail” in the event that you ever need to sell the note

Re: Help with note please? - Posted by Todd(AZ)

Posted by Todd(AZ) on June 07, 2006 at 13:09:55:

Hi Jordan. I paid more than I wanted to but I’ve come to terms with and know my market now so here are the stats: 76 2bed/1bath,12x60, No fix up, cleaning only. Needs paint, carpet, etc but did none of it. 2 window A/C’s which won’t cool every room in the home. Paid $3,900, $100 for 2 girls to clean it, $400 in misc, gas, ads, partial lot rent. Sold for $11,500. Lot rent is $245 a month. $5K down, $250 a month/31 months. Todd(AZ)

Re: Try this - Posted by Todd(AZ)

Posted by Todd(AZ) on June 07, 2006 at 08:56:28:

Thank you Lonnie and those who wrote. I understand exactly what is being said but on this particular deal, my flexibility is a little (self) limited. The sales price has already been set, and since they are putting a large down, I really don’t want to jump over the 12.75% interest rate to the “teens” of 13%+. Yet, I’m also not crazy about dropping it to 11.39% to make it work evenly and lose a little $. I was kind of hoping I could make it work some other way. If not, I believe I will probably drop it to 11.39% and be happy and move on. Thank you for responding. Todd (AZ)

Re: easy peasy - Posted by Todd (AZ)

Posted by Todd (AZ) on June 06, 2006 at 23:15:47:

Hi Steve. I tried doing what you suggested but the two amortization sites I use either a. Won’t let me enter 30.59 months or b. Automatically change it to 30 months and change/increase the payment by a few dollars. I was really trying to keep the payment exactly $250.00. Maybe your site works better than mine does and will allow 30.59 to be inputted? Any other suggestions? Thanks, Todd (AZ)

Re: Help with note please? - Posted by Jordan (CA)

Posted by Jordan (CA) on June 07, 2006 at 14:15:02:

That’s a good deal. Wish I could find them for those prices here.

$5,000 down is a large amount! How long did it take you to find a buyer? Do you usually get that much down in your market?

Is it in a 55+ or a family park?

Nice deal.

Re: Try this - Posted by osupsycho (OK)

Posted by osupsycho (OK) on June 07, 2006 at 22:58:28:


I just played with the numbers and found if you keep everything else the same you can raise the note to $6573.50 for 31 payments and it will work out like you want. Just tell you buyer that you have a $73.50 processing fee and you will simply add it to the note. If you don’t want to mess with that then I would just settle for the lower interest rate.

Just my thoughts,

don’t get piggy… - Posted by JD (IL)

Posted by JD (IL) on June 07, 2006 at 22:44:29:

That 1% isn’t going to change your life. You said it yourself, some terms are set. You either drop the rate so it’s even, or they have an odd payment. Don’t sweat a drop in rate too much, if you look at it over time, it’s not going to have a huge impact on your profit compared to carrying one more month lot rent.

Best of luck!

Re: Try this - Posted by Jordan (MI)

Posted by Jordan (MI) on June 07, 2006 at 11:38:08:


Free up your mind, and stop limiting yourself. I’ll let you in on a secret (I think it’s in Lonnie’s books…), the 12.75% interest rate is trivial. You really have to ask yourself… how much interest can you charge for something that no one is loaning money on? 0%, 5%, 10%, 15%, 25%? If there are no banks loaning money on used mobile homes, how can we have an industry standard? You are the only one offering to finance that home. The industry standard for that home is that you get to pick!

Now with that being said, I think it is important to charge some interest rate in most all cases, to build in value for the buyer, and an insentive if they decide to pay down the principle.

The real important number is how much your buyer can pay per month. You really have to make sure that it is not more then they can afford. Many buyers have bigger eyes then they do paychecks…

That’s the number I would be spending my time worrying about. You’re not going to get any more $$$ then what they can afford to pay you.

-Jordan (MI)

will email nt - Posted by Steve-WA

Posted by Steve-WA on June 07, 2006 at 09:28:52: