Re: Investor Capital for Lonnie deals - Posted by David Alexander
Posted by David Alexander on May 07, 1999 at 10:37:35:
I would say the Investors would probably want to be secured, either by the MH’s, the Notes, or other collateral. Also, if your in this for the long hall I would say you want the Investor secured for your own peace of mind. You could even go so far as to set up insurance so that in the event of something untimely, the loans would be paid off and your family would still get the cash flow and assets.
I would suggest borrowing against the collateral as John teaches, as that gives you the most freedom.
If you are going to sell the notes or partials, I put protective clauses in them such as first right of refusal if sold, the right to keep making payments in the event of default to keep the note current, the right to foreclose myself. You could also accomplish this having a seperate management agreement with your Corp and the Note buyer.
By far the best way is to borrow against the Notes as collateral, also put substitution clauses in the agreements. You want Investors that are willing to send you a check to do the deals, and then you secure it with MH paper later.
Now for the 1,000,000 dollar question. Where did you find Investors to loan against Mh paper at 15%. I have that for my RE, but the best I have for MH paper is 18%. Cultivate these guys, together you can make alot of money. Once you have that in place if the funds are limited and you top them out, you will want to start looking for Institutional money to cash the paper out, get your cash and start the process over.