Is this sellable? - Posted by Jacque - WA

Posted by Jacque on March 07, 2001 at 20:40:29:

Hi David,

Thank you so much for your advice.

I have emailed you and would very much appreciate the referrals for note brokers here in Washington.



Is this sellable? - Posted by Jacque - WA

Posted by Jacque - WA on March 07, 2001 at 12:41:04:


I am reading everything I can on notes right now but because I’m at the very beginning stages of creating notes…I still don’t know enough to answer this question.

I am wondering how feasible it would be to sell this note:

I have a seller who inherited this property: 8 acres with a mobile. She was asking $89,000 but is down to $35,000 CASH.

I have a buyer, who has been prequalified at $115,000 and wants to build. So, he wants to owner-finance this property until they save enough down payment. They have offered, $75,000 for the property/mobile and have $7000 to put down. I am willing to create the note for the remaining balance.

My question is: Can I sell this note right away to close this deal for cash? The owner is willing to owner-finance for a short time (6 mnths or less), however, I’m concerned that there would be no way to get the $$$ to cash her out in that time frame.

I agree–you may be looking at something like… - Posted by Rick Roberts - KC

Posted by Rick Roberts - KC on March 07, 2001 at 18:43:12:

I agree with David?your deal looks quite feasible. In very GENERAL terms and depending on the type of mobile home (single or double wide, age, condition) and credit file of your buyer, you will LIKELY be facing a first note with a original balance of 65-80% LTV and an interest rate of 11.5-12.75 or so.

For example, let?s assume that this is a double-wide in good shape and that your buyer has pretty good but not spectacular credit. You may be looking at something along the lines of the following:

Sales Price = $75,000
Down = $7,500 (10%)
First Note = $56,250 (75 LTV, terms 12.25% 30/30)
Second Note = $11,250 (15%)

$52,000 = approximate $ from sale of note
$ 7,500 = down payment
$59,500 = Gross Cash At Closing
$11,250 = second note
$70,750 = Total Gross Proceeds

I hope that these general thoughts help. Good luck!


Re: Is this sellable? - Posted by David Butler

Posted by David Butler on March 07, 2001 at 16:49:23:

Hello Jacque,

On the surface, it sounds very feasible :wink:

But, you can look through the ton of posts related to note structuring AND simultaneous closings (selling the note right after the close of the property sale) available right below here… and see that there is a lot more information necessary on that PARTICULAR deal itself, including that buyer and that property - to truly know how feasible that note will ultimately be when it comes time to sell the note - and at what likely price.

Sounds like the Payor is likely okay based on the prequal…, but there might be a wrinkle or two with regard to the property. The parcel size is outside the range of Fannie Mae/Freddie Mac guidelines, so chances are the payor will be somewhat limited in his options for obtaining financing - and he’ll have to look very good on paper for a construction/take-out combo loan.

Moreover, construction/take-out packages can be a bear at times… and not enough lenders really do a good job with those any more.

Pretty basic stuff though, outside of the technical aspects of properly structuring and “papering” a simultaneous closing. To save us both some time…
We have several highly experienced note brokers up in the state of Washington, particularly some who can work through the legal nuances that need to be dealt with in creating the note in the first place, in a manner sufficient to avoid being a non-“seller-exempt” loan transaction…

Feel free to email me, and I’ll get you hooked up with a few referrals. Hope that helps, and good luck on what appears to be a juicy possibility for you.

David P. Butler

Oops, Thanks for your responses. (nt) - Posted by Jacque - WA

Posted by Jacque - WA on March 07, 2001 at 12:42:19:

Hit the button before I signed off…

Thanks for any advice.


Wow… - Posted by Jacque

Posted by Jacque on March 07, 2001 at 20:44:39:

I could see that it was a good deal even though I wasn’t sure how to get the cash to the seller but WOW…

Unfortunately, the mobile is a single-wide, older, in good condition. It has a huge deck with hot tub. Power, well, and septic already at the site with approved building plans in hand - although my buyers are not sure they want to use those particular plans. This is an engaged/soon to be married couple and they have certain dreams for their house…

The land is also boarded on 3 sides by State land, so they will never have any one near them.

Wow, again…to think, I would have been ecstatic with as little as $5,000 - $10,000…

Thanks so much,