Posted by B.L.Renfrow on February 28, 2000 at 13:24:48:
Debra,
Is it risky? Yes. Would I do it? Maybe. Just be sure the market value of the MH is realistic, i.e. what you could actually sell it for in your community, not what some book says it’s worth.
“Can I have conditions in my note that if they 1) break park rules, or 2)default on their first loan, or 3) default on my loan, that I can repossess the mobile home if I pay off or assume their first loan?” Not only CAN you, it’s a MUST.
“Would this be difficult to do?” I wouldn’t think so.
I know Lonnie was saying in Atlanta that he makes loans to his MH buyers all the time, particularly at Christmas. I don’t know whether he secures them with a second lien, but I would assume so.
Is it too risky for second lien on mobile home? - Posted by Debra G.
Posted by Debra G. on February 28, 2000 at 12:10:11:
I have a family that would like to borrow some money, and are willing to have a second lien put on their mobile home as collateral for it. The balance of the conventional loan and my loan would be less than the market value of the trailer. The fees for refinancing with the original lender is more than they want to pay. Would this loan be too risky? Their credit it OK, but the home is the only thing of value for collateral.
Can I have conditions in my note that if they 1) break park rules, or 2)default on their first loan, or 3) default on my loan, that I can repossess the mobile home if I pay off or assume their first loan? Would this be difficult to do?
Re: Is it too risky for second lien on mobile home? - Posted by Tony-VA
Posted by Tony-VA on February 28, 2000 at 17:26:17:
A couple of ideas that I would suggest you keep in mind in considering this deal.
Don’t get more money into this deal than you would have paid for the home itself. I would look at this deal, as I would buying a MH note. Look at this from a worse case prospective. If you give them the loan, then have to pay off the 1st loan, would the deal still be a good deal? Would the estimated selling price be realistic in this particular park? Would you still make a good yield or just break even? What if they home is damaged before you can get it back, how would this effect your worse case scenario pricing? I don’t like just breaking even.
Now my questions. Are you simply loaning this money for a interest rate yield, behind a larger 1st, to be nice and help someone out? Are you looking to do this deal as an investment?
As an investment, I would want to buy a note (or better yet create a note through a lonnie deal), not lend, so as to create a greater yield.
As a loan to help someone out, I would suggest that you really consider the worse case scenario to decide if you are happy with it, before you make the loan. It’s like loaning money to family, only loan as much as you are willing to lose because chances are you will never see that money again. It’s too hard to collect from family.