Posted by Karl (OH) on May 15, 2000 at 17:36:48:
How involved is this investor in your deal? Is he a partner who’s going to share the risk and help with all the work of putting the deal together, or is he just providing the funds?
If he’s just loaning you money, keep it simple and just pay him a fair return in monthly payments. 15% is a good return on a nice safe investment, don’t you agree? Your investor doesn’t have to know how much of a down payment you get, or any other terms of your agreement with your buyer. Why should he? He didn’t put the deal together, you did. He’s getting a fair return on his money with very little risk. You’ll be doing all of the work and taking all of the risks, right? You need to be compensated generously for that.
You shouldn’t have much trouble finding investors willing to loan you money at around 15% that’s secured by a mobile home. (Plus you know you’re going to make the payment to your investor like clockwork anyway, to keep the investor happy and your reputation intact, no matter what you’re homeowner does.) I’m just starting to look for investors also, I have several friends waiting to give me money. A guaranteed 15% sure beats a risky stock market investment.
I’m sure some other more knowledgeable folks will reply to this question and give you some more detailed advice. I read a detailed post by Tony VA on another site a few days ago explaining how he uses investor’s in his deals. He structures it so less than half of the MH note payment he receives goes to the investor. Perhaps he might post that information under your question here. Also, a tip Dirk Roach gave me a little while ago was to try to resist being overly generous on the first deal with an investor. If you later decide you’re giving away too much money, it will be extremely difficult to back off on the terms on the next deal, without looking like you’re getting greedy.