Money question... - Posted by Carlene (Maine)

Posted by Tony-VA on November 12, 2000 at 03:02:23:

Way to go Carlene! You passed the Lonnie 30 day challenge and it has only been a couple of weeks. Good work!

As for the money end. Why not pursue both? Selling partials is nice, but the discounts can be costly to you.

A line of credit is not necessarily a bad thing. In fact, if one can be obtained, it will provide you with less expensive capital and begin to build your relationship with the lender. Down the road you may work that relationship into many different deals.

The good news is that you have options. By using both sources, you expand your opportunity. The line of credit may take time to establish and the relationship with the lender may take time to develope (before they will consider hypothecation etc.). Okay so in the meantime you use partial note sales as a funding source.

You may also want to consider IRA money from family and friends. Companies like Entrust and MidOhio allow Self-Directed IRA’s to invest in mobile home notes. These friends and relatives can pick up a great yield, tax deferred (or tax free if Roth). There are some “arms length” transaction restrictions to keep in mind but either of these companies can explain further.

The point is that there are many options available to you. Keep doing good business and the money will find you.

Congrats again.

See what happens when you set a goal and refuse to quit until you accomplish it!


Money question… - Posted by Carlene (Maine)

Posted by Carlene (Maine) on November 11, 2000 at 19:23:55:

Hello all,
Just sold my second MH. Feels pretty good. We are soon going to be at the end of our ‘initial investment monies.’ We also have more buyers than we can find homes for. (I know, I know, poor me!)
At this point my partner and I are discussing whether to sell a partial note (Tim, this is where you will come in!) OR whether to consider a commercial line of credit through a (insert bad word here) bank. We can see the advantages and disadvantages of both. But just wanted to know other’s experiences and advice.
Thanks, hope you are all doing well!

Re: Money question… - Posted by anthony

Posted by anthony on February 03, 2001 at 05:20:13:

How do you work out yield on rented house?
I think its cost of house divided by rent over year/

Way to go!!! - Posted by Tim (Atlanta)

Posted by Tim (Atlanta) on November 13, 2000 at 06:58:08:

Now see, I knew that dog restriction would only set you back temporarily! Congratulations on selling those mobile homes.

As far as the money goes, I agree with Tony and Robert here. Develop multiple sources of money. Do not rely on one single source of funds for your Lonnie deals. If you do, that source would likely dry up.

As for the cost of partials, yes, they can be quite high to start. You understand, this is a risky business, and most note/partial buyers expect a high return. After you build up a relationship with the note/partial buyer, they will give you a much better rate on future business. For that first partial, you can expect something around the 30-35% range. But there are some investors that have a proven track record with us, so we might go as low as 25%. As time goes on, trust builds up, and risk is diminished. As risk goes down, so does the return. It is just that simple. I would rather invest my money with someone I know can perform at a lower rate than someone I don’t know at a higher rate. See what I mean?

Now go out there and find some more deals!!! Or maybe you could do like Tony and take the winter months off. Yeah, right.

Good job, Carlene. - Posted by Robert (Houston,TX)

Posted by Robert (Houston,TX) on November 12, 2000 at 17:37:19:

Hi Carlene,

I see the winter season hasn’t slowed you down any. And I’m sure Tim would be more than willing to accept a good note. What a great problem, too many buyers. Sounds like you’re going to need funding from somewhere so you might as well line it up now. As Tony mentioned, relatives are a great source. So are cash deals, getting the buyer financed and seller financing.

Good ‘luck’,