Learn your market, then go for it - Posted by Blane (MI)
Posted by Blane (MI) on May 26, 2000 at 13:15:34:
I can’t give advice about adult parks, but I encourage you to move forward to your first deal. Listen to Roy and make sure you have a market for what you’re selling. Also compare with other homes for sale in that park, are similar homes selling for $9K? Or could you pick one up for less than $4500? Marketing a 1 bath won’t necessarily be a problem, nor is it in a senior park, especially if that’s all that’s around there.
Let’s run some numbers, maybe that’ll help your confidence. Remember, Lonnie says you don’t have to make a killing on your first deal, you just have to go out and do it. Let’s say you buy the MH for $4500, and sell for $9000 with $1000 down, at the industry standard 12.75 percent. That leaves you with $3500 in an $8000 note. Even if your buyer can only afford $200 a month, my calculator tells me the note will be for approximately 52 months. That 52 month note will have an annual yield of approximately 64%. And that’s the worse case scenario!!
If your buyer can afford $250 a month, the note would be for about 39 months with an annual yield of about 78.5%. If your buyer can afford $300 a month, I’m showing a 93.6% annual yield (please correct me if I’m wrong folks). Even if I’m a little off, I’m betting it’s a better yield than a CD can give you.
As for the wife, you will just be the latest in a long line of people whose spouses (or other family) think we have really gone over the deep end this time. She’ll start coming around once she sees success and money. Until then, keep reviewing Lonnie’s books and learn your market. Let us know how it goes.
Hope this helps,