Posted by Steve–DC on October 22, 2000 at 03:17:44:
Hi Terry,
I guess I was being a bit naive when thinking it would be so simple to purchase the note(s) and then be able to obtain the property should the payor not perform.
Obtaining the legal help here in the DC area would not be a problem. Heck, we have more lawyers per capita than any place in the world. PAYING for that help is another thing…
I figured that the best place to start doing the paper deals would be right in my local area, especially in the park that I can make my “golden goose” park. This way I would know about some of the potential problems that might be attached to the property–back taxes, rent overdue, etc. I know I would have to do my research but I figured that I this approach would pay off just as well as buying the property. Maybe better. Since the high demand for lower cost housing in my area makes it (so far) seem harder to find those “cheapo” Lonnie deals, I thought it might be easier to find the owner held notes.
I knew that there would be certain things to watch for to make sure that the purchase of the note(s) was not only legitimate but also legally well-protected. What I did not know was what those things were. I figured that having an attorney in on the first several deals would be necessary to make sure all the clauses in the notes kept us (me and my wife) protected. But, after learning more about the different contracts that were out there, I thought it would not always be necessary to have an attorney review the contracts unless there was a clause in the contract that I had not seen before or one that appeared to be worded differently that might cause problems.
Does any of your books or tapes or study courses go into all of this? If so I will make sure and get them. I certainly want to pursue this path if I can make it safe–at least safer–and profitable.
My wife and I will definitely be in Atlanta. We will not be in until late Thursday PM but we will catch up with you sometime over the three days and try to talk a bit more. We are certainly looking forward to your part of the workshop.
Thanks again for the info. It will give me enough info to get started talking with my local attorney. If you have any other criteria that I might need to know about, please post them or email them to me.
Posted by Steve–DC on October 21, 2000 at 04:58:29:
Is purchasing troubled MH paper(meaning that the current buyer will likely get evicted if you buy it) a method many of you use to essentially purchase MHs at a discount? Or is it difficult to get enough of a discount on the paper to make the transaction worthwhile? Any comments or experiences on this subject are appreciated.
Posted by k greene on October 24, 2000 at 21:44:00:
I do not think jumping into a hornets nest would be a good choice. If a problem exists in the beginning you will have it for the duration. Just say next and go find another deal. There are too many to choose from.
Posted by Terry Vaughan on October 22, 2000 at 24:24:16:
Steve:
This idea is common among “portfolio” buyers. Understand however, you REALLY have to know your market values BEFORE you close on this type of deal.
Several things to watch out for:
Most states allow the park owner to “lien” the home for back rent, which the “note” holder may have to pay to take possession of the home after eviction of the tenant. In some states this is as low as the last three months and in others this could include the last two years!
Local City/County taxes may also be an issue (you may have to pay them), so check these out BEFORE you buy the note(s). Minnisota has been trying to collect back taxes from me for years on a home my partnership held a note on, but we never owned the home!
Make sure the note(s) are correctly written and have no legal loop-holes for the payor BEFORE you buy the note(s). If there is a problem, you may end up with a note that is not colletable or enforceable.
Make sure you understand the recording/repossession system in your area BEFORE you buy and begin eviction. If you don’t follow the proper legal steps, you could be out of luck when it comes to reposessing the home!
These are just a few of the items you should be careful about when approaching this type of purchase. Best to have a good legal firm behind you when you do this type of deal, which may mean you will have to buy a “bunch” of them to justify the costs.
Posted by Steve–DC on October 24, 2000 at 21:59:54:
Hi K,
As I understand it, the purpose of buying the MH paper that is in trouble (and/or default) is to either get the MH back from the payor and then turn around and resell it with financing and make your money that way.
OR, if the note is in default, demand a restructuring of the payments that the payor is currently making (or not making) and make your money from the higher yield that the restructuring brings.
You could win in either scenario but as Terry pointed out, there are many things to watch for to make sure everything is done correctly.