Re: Ways to make this deal better??? - Posted by Tony-VA/NC
Posted by Tony-VA/NC on September 30, 2003 at 08:27:50:
Joe’s question was the same as mine.
You asked how to make this deal better, financing would be a nice touch. Many times we can obtain a terrific price because of that quick cash sale via the line of credit. I would encourage you to seek a means of refinancing the land/home package to clear the line of credit so as to free it up for future deals.
Although the LOC may have a rate of 5%, the number of years over which it is amortized will make a difference.
Typically banks will want you to hold the property for 12 months. At that time, they will consider a refi based upon the Appraised Value, not the lower purchase price.
JP, in my area, I would do this deal. Your rents are as high or higher (mine would run about $500 for a decent, older mobile on private land).
I prefer to rent both the land and home but you can choose many different strategies here. You may want to wait until after the refi to sell off the home. The land and home together may be necessary to secure a bank loan. This may prevent you from selling the home separate from the land so bear that in mind.
Consider this as well. You would have no money left in the deal. You would likely walk away from the refinance closing with cash in hand. Now think about that. You get cash for refinancing and you get a nice monthly cash flow. What’s not to like?
I encourage you to also consider the long term income from this property over a shorter return on investment approach. This type of land/home package can produce a nice profit for years and year to come.