Posted by jp in pc on September 29, 2003 at 15:54:19:
Thanks for the advice. Here the appraiser is about 10 to 15% below the retail on just land as a minimun. Houses are more like 20 to 25% below. I’m having trouble convincing myself that this is worth the risk/hassle…
Ways to make this deal better??? - Posted by jp in pc
Posted by jp in pc on September 29, 2003 at 13:30:31:
Looking at a ‘lonnie’ MH on a lot that’s worth about 16k (based on tax appraiser’s info). Owner is wanting to sell MH and lot for 19K (starting price), I figure he’ll come down to around 17k or so with the cash offer I can make on it.
I have a possible buyer/renter lined up who can pay 500-600 a month and I was wondering if anyone had a way for me to structure this so I can get max benefit out of using my cash resources to fund this without having to wait forever to recover my money.
My first thought was to finance the whole package to the buyer at 10% down and 12% interest over 5 years which would equal a payment for the buyer of about $600.00. My ROI would not be through the roof but it would be an acceptable 20+% or so.
I also thought about selling the MH with a short term note (24 months or so) and doing the lot on a rental plan giving the buyers a lower payment initially then they could focus on buying the lot once the MH was paid for. Not sure what the benefit would be other than would not have the MH to worry about and I would own the dirt.
The MH is not in great shape but it’s watertight and the buyer’s seem to be pretty handy (or at least they say they are…). I figure that the MH is worth about 4k retail in it’s present position and about $1500.00 to me as is.
Suggestions???
JP
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.
Tony
Re: Ways to make this deal better??? - Posted by Joe C. (AR)
Posted by Joe C. (AR) on September 29, 2003 at 21:46:12:
How are you financing the buy? This can make a difference on the sell strategy.
Joe C. (AR)
Re: Ways to make this deal better??? - Posted by Tim
Posted by Tim on September 29, 2003 at 15:32:02:
I don’t know where you live, but around here the tax appraisers info is worthless. I invest where I live & in a town a 30 minute ride from here. Where I live the tax appraisers estimate is about 15% lower than retail. The other town I buy in, in another county, has tax appraisals that run about 25% higher than retail. In fact, I would be ecstatic to sell any of my properties in the other town for the tax appraisal, because that would be about twice what I paid. Be sure & check what the fair market value is before you commit.
A few questions down this line - Posted by Philip
Posted by Philip on September 30, 2003 at 19:46:57:
I am about a month away from selling my first mobile with land. The purchase of this package was financed partly by the bank(land) and partly by investors(the home).
If I were to parcel off 1 of my 4 acres and sell the first land/home package with private finance would the bank even entertain the idea of refinancing the package as a whole, after a year of holding time?
Even if I was selling on a contract for deed?
I realize they would want to change their original land loan to me because I would sell a parcel.
But would they structure the refinance in a way where I could come out with cash and cashflow?
They hold the original 4 acre land loan.
Philip
Re: Ways to make this deal better??? - Posted by jp in pc
Posted by jp in pc on September 29, 2003 at 22:03:46:
equity line of credit @ 5.5%
The more I thought about it the more I’m leaning away from it. Ended up finding another MH that is a ‘lonnie’ deal with the buyer’s already in the MH. I’ll post the stats once the dust clears…
Thanks