One of the things that I think I’m really gonna have to be solid on if I am to find people who are maybe not even remotely aware of how notes ‘work’ (as I really was only a few weeks ago; before DOW… what an excellent primer!) is the explanation of how I can afford to pay them what may seem like exorbitant rates.
Other possibilities are credit cards and places like AGFC that will happily collect an arm and a leg from you for a consumer loan that can be collateralized be ANYTHING, heck, I’ve even seen people running ads in the classifieds : Need $10,000 can pay 16 % (or 18% or whatever)… secured, blah, blah, blah…
And then the trick will be to keep track and be more than dependable on keeping up those payments… not too long after it all gets going, I’d be willing to bet it’ll just get easier. Having a track record always helps, eh?
Can anyone run me though the steps in finding an investor to buy a partial note??
I’m not certain I can find a “friend or family member” as Lonnie says. Are there people out there that just buy partials?? Where can I find them?? What type of yield are they looking for??
The first place I suggest you start looking is at your local RE/Investor Clubs. Find out where they are, and start attending. Get aquatinted with the folks in the group and find the one’s who have money to invest. Takes time, but well worth it.
Let everyone know what you want to do and keep spreading the word. There’s plenty of money out there, but you have to sell that investor on YOU more than a MH note.
You could also be a bird-dog for another investor until you build up enough cash flow to do your own deals. I paid one of my students $1500 for finding a deal and flipping it to me. (I only do deals in my area, through).
Re: Recovering our cost… - Posted by Tim (Atlanta)
Posted by Tim (Atlanta) on April 26, 2000 at 07:19:46:
There are people that buy partials, but there are not many. I am one of them. I e-mailed you the details by private e-mail. I would be happy to do the same for others.
As far as the yield goes: There is a very small market of investors to buy partials. Therefore the rate will be pretty high. Sometimes as much as 35%. Yes, family and friends would be happy with a much smaller return. You are talking about using investors, who don’t know you from Adam. They are taking on a significant risk, so they expect a good reward.
But let me illustrate with the typical Lonnie example how paying 35% on a partial can increase your yield. You buy a MH for $2500, sell for $5000, 500 down, 12.75% for 36 months, payment of $151.08. Now you have $2000 in this deal ($2500 purchase price - 500 down payment). Your yield is 82% or so. That is pretty good. Now you sell a partial on the note. You sell 36 payments of $75.54 to an investor. They pay you $1669.91 for that cash flow. This represents a 35% yield for the investor. What is your yield now? You have a total of $330.09 in the deal (2500 purchase price - 500 down - 1669.91 on partial). You will receive 36 payments of $75.54. According to my calculations you have a 274% return. Now that is a good return. Also you now have $2169.91 to go and do the next deal with.