Posted by Karl (Oh) on March 27, 2001 at 22:08:28:
I do most of my deals in a 450 home park. Today I met with the PM to look over the application from a guy who wants to buy one of my homes, and his credit isn?t very good. The PM shared with me his observation about the correlation between a tenant?s credit report and their lot rent payment history. He?s reached the conclusion that there is very little correlation. My PM is much more interested in an applicant?s rental history and criminal record. He has a list of all the delinquent lot rents in his park, and the people on his list don?t necessarily have bad credit. He just evicted a guy out of the park who had great credit history a year ago when he moved in. We talked about the folks that I?ve sold homes to over the past year on a note who ALL had questionable credit. They?re all current with their lot rent. This PM is very flexible with who he allows into the park, but works the delinquent tenants very aggressively. He has a full park.
I tried to work in one park that ran a brutally thorough credit check. No one ever got approved, from what I could tell. I thought it was going to be a great park, because there were many nice homes for sale cheap. The problem was, no one could get past the park office. They had a lot of vacancies. I?m not sure how they made money. So this would not be a good park to try to do deals.
Different parks have different criteria for park approval. And the banks have their criteria for approving a bank loan. These aren?t always the same criteria. My park is probably more lenient with my applicants, because the PM trusts that if someone goes south, I?ll step in right away and straighten out the problem. That’s where the strong relationship with the PM comes in handy.
In addition, not all the buyers we sell to are unable to get a bank loan. They may just not want to mess with banks. We use that as a selling point when we advertise “no banks”. Or they may just want a cheap home that a bank won?t make a loan on. I?ve sold six 12X60 trailers in the past year on notes. The lender I work with won?t loan on homes less than 14 foot wide.
Karl Kleiner