After selling your first homes you should be able to find a private investor (friends, relatives, etc.) who would make you a personal loan, secured by a first lien on the homes you sold. Offer them a higher return than they are getting on their savings, bonds etc. (for example 15%). If you keep your payments lower than your receivables, you will begin to build a monthly income. If you ask for a loan of just enough to get your money back it will be only a part of your receivable and what the home sold for, making the lender feel safer in making the loan. If you have a good banking relationship, they might make loans to you, secured by the homes.
Satisfy the lender’s most important consern: that the loan will be safe. Point out to them that the promissory note makes you personally liable for the loan, which will be secured by a first lien on the home. Since the lender doesn’t take title to the home, they will have no liability in the event someone is injured or decides to sue.
I have spend almost all day today reading the articles and posts on this site and am I FIRED UP!! I am really interested in the Deals on Wheels, mobile home purchasing side of creative real estate investing. I’m going to be ordering Lonnie’s books, but I have a question that I’m hoping some of you can answer in the meantime. Here’s a scenario:
I have $5,000 to invest. Say I am lucky enough to buy two mobiles for $2,500 each. Keeping the math easy, say I sell them for $5,000 each with $1,000 down on each and have $200 per month payments coming in on each. It will take 15 months just to get my initial investment back; I will start taking profit on the 16th payment, correct? But how can I realize profit before that time so that I can purchase more homes for resale, not to mention having some cash to live on. I know I must be missing something here.
Any help will be greatly appreciated. Thanks so much! This site is very informative and seems like everyone is ready to help.
Re: What about when your investment money is gone? Help, please! - Posted by Tim (Atlanta)
Posted by Tim (Atlanta) on May 01, 2000 at 06:29:38:
You could sell a partial on the note that you created from the sale of the mobile homes.
Let me illustrate with the typical Lonnie example. 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.
Or you could try to buyers financed through Conseco or some other mobile home financier.
If you would like more details on selling mobile home partials, just email me.
Re: What about when your investment money is gone? Help, please! - Posted by Jim (Alaska)
Posted by Jim (Alaska) on April 30, 2000 at 21:14:42:
Michelle,
If you look down the page a bit you will see a post from Lonnie that has a subject of “He wants what?” This is a way to grow the money that you have. The financing deals can come later when you have more cash.
