How to finance and sell? - Posted by batpro

Posted by JohnBoy on September 07, 2001 at 08:24:55:

If you get the MH set on the other lot before selling the house, you can offer the MH with lot as a package deal with the house. This would allow someone the option of buying both with having the MH as a rental property to help pay their payments towards owning the home and MH.

I would offer them both either way. As a package deal or separately, which ever way sells first.

Let’s say for an example you were to sell them both as a package deal for $55k? I’m assuming you’re thinking of putting a Lonnie deal type MH on the lot. You offer to seller finance with $5k down. You finance the $50k at 12% amortized over 15 years. The principal & interest payment on that would be $600.08 per month, plus taxes & insurance. The buyer can rent the MH out to help pay off his mortgage payments to you, allowing him/her to live in the house cheap!

Lets say you were able to borrow $50k against the lot amortized over 15 years at 9%? Your PI payment would be $507.13, leaving you with about $93.00 per month cash flow, plus the $5k you got down, after making the payment on your lot.

You end up getting your $20k equity loan paid off up front, an extra $5k up front on the sale of the house and MH, your lot paid for by your buyer’s monthly payments, and $93 per month in extra cash flow for 15 years! Then you have the equity in your house to use towards any future deals.

How to finance and sell? - Posted by batpro

Posted by batpro on September 06, 2001 at 19:33:46:

I am a newbie,

I have been looking at a small 2 bedroom house for about a year that comes with an extra lot, which I plan to place a mobile home (yes they are allowed in this small city).

I made an offer last week of $14,000. I think they are going to accept it. I got a call tonight and they said they would take $15,000. I said no, and she said she would talk to her dad (he originally bought the house and they started a mortgage with him in the amount of $11,000 5 years ago) and call me back tomorrow. I think they will say yes tomorrow, lady wants to move out to the west coast pretty bad. I think I could get about $30,000 for the house with owner financing.

I plan on getting a credit card advance to pay for the house. The credit card company charges 2.5% of the total for a monthly payment so my payment on the place at least $350 per month not including taxes or insurance. I thought I would go with a credit card advance in order to avoid costs associated with closing. With my current income I can not manage that payment for more then a few months.

So I thought I should sell with some type of owner financing so I could sell it fast and get some additional money to above the cost of my monthly payment. I was thinking Contract for Deed or Lease Purchase. I have no experience with either, this is my first house purchase since my own house.

Can you experts give me some guidance on what to do here.

My main concern is to cover the monthly payment ASAP and to make some additional money above the monthly payment.

I am closing next week on a lake lot in the amount of $20,000 and I am taking a home equity loan out to pay for that so my equity is maxed out on my house. However, the 3 acre lake lot according to the realtor is worth about $100,000-$120,000. There is a lot for sale down the shore about 2 blocks from my lot for $115,000. And apparently one sold for that recently. How did I find this deal you are thinking? Out of state owner - searched the tax records, he was not aware how much the prices have gone up.

I was wondering if any lender will give me an equity loan on the lake lot??? Would they? Then I could take out like a 15 year fixed rate loan and have lower monthly payments.

Any help you people can provide would help.


Re: How to finance and sell? - Posted by JohnBoy

Posted by JohnBoy on September 07, 2001 at 24:30:06:

Banks will usually loan up to 50% on vacant lots. They usually amortize those over 10 years with a 5 year balloon. Although you may be able to get them to amortize it for the 15 years, expect a 5 year balloon on the loan.

What is the rate on your home equity loan and how many years did you get on that?

If the lake lot will appraise anywhere near the value you are claiming it is worth, then see about borrowing enough to pay off the house deal, get enough extra to cover the cost of putting the MH on the other lot, plus a little extra to carry you for several months to make the payments on the loan, and possibly enough extra to pay off the home equity loan to free up your personal homes equity.

Loans on vacant lots typically run about 9% - 10% on interest rates. If that is lower than the rate on your home equity loan then getting everything wrapped into one new loan against the lot may be a better way to go. That may make your over all payments on everything lower by having the one loan against the lot.

Then you could L/O or sell off the 2 bed home, the MH on it’s lot and seller finance the lake lot, creating one heck of nice monthly cash flow off everything.

Or possibly sell the lake lot and get a nice chunk of cash profit from that, pay off your loans on the 2 bed house and the equity loan on your house and still leave a chunk of cash left over with a nice cash flow coming in off the other house and MH.

Looks like you have several options to play with on this.

You may want to put together a nice business plan to take to the bank, showing how your deal is an excellent “make sense” deal where the bank would want to jump on this in giving you the loan against the lot.

I did a deal where I had 2 lots that I got a bank to loan 100% of their market value against them. If you package the deal up right then getting the banker to go along with this should be pretty easy.

Re: How to finance and sell? - Posted by DavidV

Posted by DavidV on September 06, 2001 at 22:47:40:

Call some banks, i don’t think you’ll have any trouble getting a 14k loan against a 100k piece of land. Verify the price the other lot sold for, never take anyone’s word for it.

Re: How to finance and sell? - Posted by batpro

Posted by batpro on September 07, 2001 at 07:18:57:

Ok Johnboy, you have some good Ideas there. That is my main concern is to get enough so I’m not leaving in too much debt. I got a $20,000 equity loan on my house at 8.75% with $200 fees to obtain the loan.

I asked the bank yesterday about loaning against the lot, the lady was not at all keen on the idea. But this was at Wells Fargo Bank. I think one of the smaller banks would go for it if presented as you say.

I think I might want to keep the lake lot, not sure yet. I know I could get one heck of a chuck of cash for it. It is on one of largest walleye lakes in the county with nice old growth hardwood forest on the 3 acres and there is 40 acres of wooded federal land tha borders the back side.

So what I want to do is get enough cash flow from the house and the mobile home to pay for the lake lot loan and bring me a few extra bucks a month. I think I will try what you said, in getting a large loan against the lake lot to pay off the equity loan against my house, pay off the house, and enough to buy the mobile home, and coverage payments and minor repairs for a few months.

Thanks for the advice.