All cash, like Tennessee Bob - Posted by Al (Wi)

Posted by Dr. Craig Whisler CA on March 03, 2003 at 12:11:28:

… you have to point this out to the buyers or they won’t even think of it. This is just good salesmanship.
You benefit immensely by getting all cash with just a pittance of a discount, and the buyer gets lower monthly payments. Everyone wins. I think now you’re getting the idea.

This way you have funds from current earnings to pay your taxes and you have cash on hand to start over and repeat the process. You can even buy a little food from time to time. You may have enough cash to do two deals now, instead of having to go to the bank and borrow funds to pay your taxes (or further tap your capital account). This way you don’t have to wait for 2-3 years or more to get your profits to reinvewst them. You have them to reinvest immediately. You can grow infinately faster this way.

Cash should (almost always) be your first choice though there are always sreasonable exceptions. If you need to finance and carry the paper then a bigger downpayment would be your second choice and a longer loan with a higher selling price would normally be your third choice.

I can remember a time when most folks on this board expected to have to pay for all of their mobile homes. Now nearly everyone realizes that at times you can get them free. It took an expanded horizon and the realization that this was posible before others started TRYING to get them too. This boards frequent discussion of this point raised it reader’s horizons and pushed back their mental barriers. Later literally dozens of people began reporting that they too could sometimes get freebies and make a good profit from them. There was a time when 95% of this board thought doing business in parks, Lonnie style, was the only way to do it. After enough discussion and debating the issue a great many people began trying (successfully) to do deals on private land. Others learned that rentals worked well for them. My point is that for each of us there is a time, before which, we didn’t know about something or that something was even possible. A that point we didn’t TRY to accomplish it because we didn’t even know it existed. Well the idea of trying on a regular basis to get all cash seems foreign to most of us. We may have thought about it but didn’t try because it seemed nearly impossible to do. Now after some thought-provoking discussion, some investors are starting to expand their horizons and see farther. They are beginning to see the possibility of making more cash sales. There are MANY difficulties to overcome to learn how to get all cash but still, a few others manage do it on a regular basis. Factories and regular mobile home dealers usually do it. Now some folks are begining to think: If they can do it why can’t I? What have they got that I don’t have? Now we are starting to think about ways to overcome sellers objections to paying cash. Not having cash is NOT one of them. Most house buyers don’t have cash either but with the help of the sellers, they find a way to borrow it. This is where we are now in the ‘state of the art’ of mobile home selling. This is the new ‘cutting edge’ where we may find greater and greater profits as we offer to solve housing problems for more and more buyers. Often when you sell for all cash you have enough money to buy two more immediately. Soon you will have enough cash to do more deals than you can find. There won’t be enough deals in your town. You won’t have enough time to do more deals. Then you have new problems: you have to start thinking anew. You have to figure out how to do more or larger deals. You might start buying small rundown mobile home parks. Later you would be able to buy larger parks etc. As a successful investor your m.o. needs to change and grow. There is a time for all of us when Lonnie deals are the best way to go. Many on this board started that way. There is also a time to change or you stop growing. That’s OK. Thats wonderful.

Different strokes for different folks. We are not all on the same rung of the latter at the same time. We were all born at different times. Begining investors will have plenty of time and little or no capital. The same approach that will work best for them will not be best for intermediate investors who have enough capital but not enough time or can’t find enough deals. Finally, end game investors will probably want to switch again to more passive investments, with less risk, less work, and a lower rate of return on their larger pool of capital. Don’t ask which way is best, rather ask what is best for me now? Realize that often we argue for the same result (to make money) but because we have diffenent experiences, live in different areas, are at different points in our investment programs we can benefit from doing things differently than others. You should not strutcture your deals as they might be best for ME. Do them in the way that best suits YOUR current needs. There isn’t always just one best answer regardless of where you are. This is a thinking-persons game. I love using cookie cutter approaches just as much as the next investor but over the years I have found that either my cookie cutters must evolve and change or I don’t.

I have learned soooo much from all of the generous posters on this board. I appreciate your help more than you will ever know. To my occasional detractors, I owe the most appreciation. They are the ones who made me think the most, and forced me to see weakness or inconsistencies in my logic. The more times they have caught me in flagrante dilecto, the more opportunities they gave me to learn and grow. I too have had to change with the times. As my knowlege and experience accumulates I find that my beliefs change. They change as a large result because of what I learn from you. You shouldn’t expect me to be too consistent in my viewpoints. Quite the contrary. If I am always consistent, it would mean I have stopped learning.

Regards, doc.

All cash, like Tennessee Bob - Posted by Al (Wi)

Posted by Al (Wi) on March 03, 2003 at 06:59:59:

Just wondering:

If I sell a home for $6,500 and the buyer already has $2,000 saved for a down payment her mortgage is $4,500 with a payment of $150 for 36 months.
If I offer her a 15% discount of $975 she would be left with a balance of $3,525. If she gets a cash advance on her visa (OK, she can use her moms card) wouldnt the payments be about $65 ?
I would think she would rather pay $65 instead of $150, and I would rather have all cash.
What number of months do credit card companies use in calculating their customers payment? We need to know so we can show how the credit card companies amortization schedule is so much better than ours.

Re: All cash, like Tennessee Bob - Posted by Phil Pelletier

Posted by Phil Pelletier on March 03, 2003 at 16:58:34:

Many credit card campanies use 240 month amortizations. Would you rather pay $150/month for 3 years or $65/month for 20 years. The answer is obvious, even to a beginner. However, the real value is to present it to the buyer this way:

Pay me with cash you receive from taking a cash advance. I will lower the price from $6500 to $5,000. You advance only $3,000 on the credit card and then you can pay the same payment ($150/month), but you will only pay for 24 months (depending on the interest rate). You could also offer to pay for the advance fee, whicjh in this case is about $60.

Just a thought, because no one wants to pay for a mobile home for 20 years at $65/month. The theory is a good one. Get cash now.


Excellent idea, what length for revolving - Posted by Philip

Posted by Philip on March 03, 2003 at 07:45:17:

credit? Is it figured on 120 months?