Posted by Tony Ferrullo on March 18, 2005 at 14:37:23:
We are indirectly doing business in the Phoenix area. We provide the working capital for a dealer there. We buy his notes.
Almost all of the deals he does are to Hispanics and they are very good payers. All the MH’s are retailed for under $20,000, with a minimum of 20% down. Most carry an interest rate of 20% over three to seven years.
The default rate is very, very low. This is because of the 20% minimum down payment. None of the note payers have good credit, this is the reason for the higher interest rate.
If you work closely with your buyer, you can dramatically reduce your risk of default. Just because a buyer has a poor, bad or non-existent credit score, that doesn’t mean he’ll necessarily be a bad payer. Many are good payers. Know your buyer.
This dealer has more buyers than he has MH’s for sale. This is because he keeps the combined park rent and monthly MH payment at or below the cost of the surrounding apartment rents.
Good luck!