MH Financing Question - - Quick Cash Profit! - Posted by drew

Posted by Jim R on March 23, 1999 at 12:50:14:


Your creative thinking sounds good. I’ve also been doing some ‘Lonnie deals’ and creative financing on MH’s over the last few months… The only suggestions I have are that: 1)if the Seller is moving into a townhome by April 1st, he may be quite motivated to get the MH sold immediately and therefore negotiable. You might talk with him & see if he would be willing to take $150 - $500 less in return for getting all cash, and also since you are ‘taking the risk’ of providing credit to the new Buyers. (He likely will have difficulty getting very much cash from buyers for this price range of MH - depending on its age and condition.) If so, you could pass part of this on to the Buyers, making the deal more attractive to them and/or increase your profit.

2)You might also offer the buyers several alternatives for financing, depending on what your situation & cash flow objectives are - offering to finance over 6 mo. or 12 mo. etc. at higher prices (and profit). Although $450 return on $1750 is certainly ‘good enough’.

Best of luck with your deals…

Jim R.

MH Financing Question - - Quick Cash Profit! - Posted by drew

Posted by drew on March 23, 1999 at 11:20:13:

Okay, here is the story…

A couple that looked at a MH I have for sale last weekend called me today. They found a MH they want to buy from a friend of a friend for $2750. It sounds like a great deal to me and I wish I had known about it first. Anyway, they want to know if I can finance it for them, for 30 to 45 days until they get some cash out of their IRA, and how much I would charge to do this? They have about $1000 to put down so I’d be financing $1750. Seller wants CASH by April 1 as they are moving into a townhome.

Here is an option I came up with:

  1. Buy the MH for $2750 directly from the Seller.
  2. Sell to new Buyer for $3200 with $1000 down and $2200 payable by May 1, 1999. Result: I make $450 profit on $1750 in about 30 days.
  3. If they don’t pay me I can re-sell it quickly for about $6000!

Don’t worry, I would only consider getting involved after talking with the park manager and making sure the new Buyer is pre-approved, lot rent is current, home can stay on the lot, etc… They may not even go for this, but I think it is a useful creative thinking exercise for my rigid little brain.

I look forward to hearing your suggestions!


Re: MH Financing Question - - Quick Cash Profit! - Posted by John Katitus

Posted by John Katitus on March 24, 1999 at 02:49:54:

The reason it’s a good deal is the seller NEEDS CASH. The other people don’t have it - you do. This is Lonnie’s exact scenario.

Just apply Lonnie’s strategy. Offer low all cash (no reason to start at $2750), maybe 1500. You will quickly find out how much they really need. You can always go up.

The plan with the buyer sounds good, but don’t make the mistake I did, twice, with lease/options. That forthcoming chunk of money, from any source, tends to get sidetracked before it gets to you. I would have a plan for that, even though they’ll guarantee it will come, before the transaction occurs.

Also, be prepared for the buyer to not like you raising the price. For that reason, I would make arrangements with the seller first. Even sign a purchase agreement and give him a deposit. Maybe the best thing that could happen is you buy it, the buyer walks away, and you can raise the price even more. Good Luck.