Owner-Financing=Lender... Business Questions - Posted by MB

Posted by Keith (OH) on May 15, 2006 at 13:25:37:

If you are leasing your homes then you wouldn’t be a dealer or a lender, simply an investor with a portfolio of rental homes. And a number of investors use this technique to avoid the dealer status. However, as I see it the complications could arise when and if the buyer exercises their option to buy the home.

With a normal L/O there is no note. Your are getting “rent” every month with a portion of the rent going towards the sale of the home. If the tenant eventually exercises their option to purchase the property you are right back to dealer status in the year the home was actually sold even if you then create a note for the sale. Keep in mind, though, most states (and the IRS) will allow a few sales per year without deeming you a dealer. So if your tenant/buyer never exercises their option (probable)or if you ultimate sales are staggered in different years you won’t have a problem, IF your state allows a handful of sales per year.

Just my opinion,


Owner-Financing=Lender… Business Questions - Posted by MB

Posted by MB on May 12, 2006 at 10:34:07:

I was curious once a person specializes in owner financing of several MH notes, are you then considered a lender?

Outside of ethics, what guidelines do non-commercial lenders follow?

Am I confused and the two are separate specializations?

Owner-financing mobile homes essentially makes your company a finance/lending company?

My questions are geared partly towards the aspect of eventually holding or selling MH notes and in the future truly become a small business that offers various types of REI owner-financing loans. I am ahead of the game but wanted to begin to get some steps in different directions I should be looking into.

Not a lender but a dealer - Posted by Keith (OH)

Posted by Keith (OH) on May 13, 2006 at 08:42:35:


The majority of our Lonnie deals don’t actually involve lending money at all. We are “creating” money by using notes to seller finance the sale of our homes. I don’t consider myself to be a lender at all. I would, however, be considered a dealer.

If I “lend” you 20K to purchase a home from SOMEONE ELSE and we structured a note for the repayment. That would be considered lending. But if I “sell” you a home for 20K and we structure an identical note for repayment, I haven’t actually lended you a penny. We have simply created a note to assist the sale of the property.

Others(including the IRS) may see things differently but I would spend more time reading up on the laws of being a “dealer” in your state rather than worrying about being a lender.

Oh yeah, I am not a lawyer, attorney, accountant or any other highly educated professional so take my advice as opinion only.


Assigning 12 mo L/O with note. Are you a dealer? - Posted by MB(GA)

Posted by MB(GA) on May 14, 2006 at 12:23:32:

I never understood the difference between a lender and dealer (buries head…). Now that I understand that, I will follow up with state laws.

Now, If I held the mobile’s with a 12 month lease option and then establish a note, would I avoid the dealer classifications?