"Lonnie Deal" Notes - Posted by Troy


#1

Posted by Marvin Seawood on October 16, 1998 at 24:29:05:

Troy,

If I were buying a “Lonnie” type note, I would expect a
yield of 25%. Minimum. Further, I would be interested only in the front payments; perhaps purchasing ¼ to ½
of the payments. If, for example, it were a three year
note @12%, I would consider buying the payments due the
first year for one third of the note balance - giving
me a yield of almost 35%, which is where I want to be.
I would purchase it in this manner (buying a partial),
because now the “Lonnie” dealer has an incentive to
stick around in the event the deal turns sour. I need
that - I sure don’t have much other security. And the
seasoning would have little (if any) impact in my buy
decision; From the default point of view, the first 2
years are critical - approximately the same term as a
Lonnie Deal.

Oh, I forgot to mention that I have never purchased a
Lonnie Deal note. So I (also) am eager to hear what
John has to say. I also would like to know if he has
any experience buying/selling mobile home notes.

Marvin


#2

“Lonnie Deal” Notes - Posted by Troy

Posted by Troy on October 15, 1998 at 22:32:55:

John,

How much yield should one expect when buying a note created from a “Lonnie Deal”? When selling; what is a reasonable discount? What factors should be taken into account to determine a “fair” yield/discount? How much weight does seasoning of the note carry?

Many thanks…
Troy