Posted by ScottC (NV) on February 12, 2002 at 13:06:49:
Good post! Check out Louis Brown’s article on the same subject, “12 Reasons NOT to collect rent on the first,” here on CREOnline:
When are your payments due? - Posted by Brian, WI
Posted by Brian, WI on February 09, 2002 at 15:54:38:
Hi,
I was wondering when you have the payments on a MH you sell come due?
If you sell on the 12th, will it then be the 12th of each month?
Or do you pro-rate, collecting the balance for the current month, then due again on the 1st of each month there after?
Thanks
Brian, WI
Re: When are your payments due? - Posted by Bob P. (az)
Posted by Bob P. (az) on February 10, 2002 at 12:24:37:
Brian,
It’s probably simpler on a bookkeeping basis to have all the notes due at the same time each month. That way, you can record your payments and send late notices out in only a few days of paperwork a month. But some of us get a charge out of seeing a “paycheck” each day!
When I first started out, I prorated the payments so they would all be due on the first. But I’m like Lonnie in that it is nice to go to the PO Box each day and get a couple of checks, so that is how I’ve set up my receivables for the last three years of Lonnie deals. When I open that little box there is always a couple of checks in there. Those little checks put a great big smile on my face everyday!
Take care,
Bob
Re: When are your payments due? - Posted by Ron
Posted by Ron on February 10, 2002 at 12:05:09:
Brian,
I work my contracts just as Karl does his, i.e., I make my payment due on the 10th of the month, there is a five day “grace” period and if not paid on the 16th, I charge a $25.00 late fee the first day and $5.00 each day thereafter until paid. If the payment, plus accured late fee’s are not paid by the 10th of the following month, I issue a 3 day notice to vacate, (state law here in Kansas) call my contract due in full, turn the paper work to my attorney and we’re off and running. Hope this helps.
The reason for the 10th of the month is, as Karl stated, the lot rent is always due on the 1st of the month, most MH parks allow about a 5 day “grace” period before late charges kick in, I don’t want my buyer to get into a finanacial bind, get behind on lot rent (which I am ultimately responsible for), can’t pay his/her utilities, insurance, food, car payment, etc., so I attempt to work with them “within reason”. The main point is, don’t let them get more than 30 days in the arrear or you will run into problems you probably haven’t dreamed of. Good luck,
Ron
Re: When are your payments due? - Posted by Karl (Oh)
Posted by Karl (Oh) on February 09, 2002 at 20:52:39:
All my payments are due on the 15th of the month. Lot rent is on the 1st, I’m on the 15th. Everyone seems to like this. If I sell a home one month, I just make their first payment due on the 15th of the next month. Sometimes, if they put down a big down payment, I’ll make their 1st payment two months out, if they’re smart enough to ask. Don’t get in a bunch about a week or two of lost interest, keep it simple, its easier to keep track.
Just my opinion.
Karl Kleiner
Re: When are your payments due? - Posted by ScottS(NC)
Posted by ScottS(NC) on February 09, 2002 at 18:52:51:
Brian
Hi, My company does it just like the big mortgage company’s do. We collect the first payment on the first of the next month after closing, unless we close on the 20th or latter than we give them the remaining 10 days of the month and the next full month with no payments. The reason for this is: Once they pay the down payment, the lot rent, the lot rent security deposit, turn on the utilitys, and pay moving expenses they are straped for a month or so. I want my buyers to have enough time to recover. I also like to carry the financing longer than typical. I like 48-60 months I figure the longer I collect the longer that deal stays alive and at 12% why not? Yes, yields go down but I am out making more deals instead of replacing very short term notes 12-24. Just my .02 HTH Take Care ScottS(NC)