Financing a la Merchant? - Posted by Bob

import · March 29, 2005, 2:07pm

Posted by Pedro on March 31, 2005 at 24:14:51:

When marketing your business – do the numbers. In anything, it all rests with the numbers. They don’t lie. Go to every home in a respective park and give them your card, letting them know that any time they have a desire to sell in the future – to give you a jingle. Converse with the people & get to know them. Play the numbers; you’ll be surprise with the results you wind up with a few months down the road. It just takes guts to go out there and face the inevitable rejection; but there’s a lot of nice people out there…

import · March 29, 2005, 2:07pm

Posted by Bob on March 29, 2005 at 15:07:24:

This is a very intriguing business model. Yields lower than Lonnie deals, and looks more cash intensive. Would you rather invest $3k at 50% or $9k at 21%? Depends on where you are in your financial life. Less legal liability: no suits for personal injury or habitability. Is there significantly more deal volume this way compared to Lonnie dealing? The appearance of large discount, or lack thereof, is important even to motivated sellers. As you’re dealing in paper, very suitable for IRAs. Here’s an except from a post by John Merchant:

"So these days I just tell all sellers and MHP mgrs that when they do get a great potential buyer, but that buyer needs buying money, call me and I’ll look into loaning the buyer his purchase price.

Last one I did had these facts:

Seller sold for $18,000, $2500 cash down payment and note for $15,500, 12%, $250 M Pmt.

I did a partial purchase of that note, and bought $11,000 of that note (and the first pmts on it) for $9,000 cash, for a yield to me of much better than 12%. (get out your fin. calc. and see if you can figure what my yield is)

The seller still owns the back end or “tail” of the note, so is still involved with me on the MH…and if/when my buyer walks, will have to help me re-sell it so as to get her part of that note.

VERY nice feature of just doing the financing like this is I"M not paying any lot rent to the MHP…and believe me the sellers are extremely motivated to help me, and discount the buyer’s notes so as to get out from under that lot rent themselves."

import · March 30, 2005, 8:19am

Re: Financing a la Merchant? - Posted by John Merchant

Posted by John Merchant on March 30, 2005 at 09:19:14:

Glad to hear this pattern is working for you too.

La Merchant

import · March 30, 2005, 11:58am

Re: Financing a la Merchant? - Posted by Bob

Posted by Bob on March 30, 2005 at 12:58:39:

>Glad to hear this pattern is working for you too.

Actually, I was asking questions about it. Ask I asked in my previous post, do you get more deal volume this way? Have you replaced traditional Lonnie deals with that business model? Do you encounter much resistance from sellers who don’t understand what you’re doing? Is my assessment of “lower yields than LDs, more cash intensive, less liability” accurate?

import · March 30, 2005, 12:17pm

Re: Financing a la Merchant? - Posted by John Merchant

Posted by John Merchant on March 30, 2005 at 13:17:21:

Actually this program supplements my LD activity…where the MH owner is asking, in my opinion, too high a price, I tell them that if THEY find the buyer & price & deal they like, then I might provide the financing.

To keep it simple I just tell them that I’ll be the bank so when they make their deal, have the buyer call me and I’ll make the loan.

Risk and yield are both different from standard LD in that first I don’t have any MHP lot rent to pay, and I don’t have to look for the buyer.

Yield of course has to be figured on all deals, and to enhance my yield on these, I’ll usually offer the MH seller a discounted purchase price for his new note: i.e. if he’s taking a note for $10,000, and a good down payment of $2500, I might offer him $8500 for his note that he’s taking @ 7%…which ups my yield a lot.

e.g., I just wound up a deal where the MH seller sold her old SWMH for $18,000, way too much money in my book, but the buyer was game, and made an OK down payment and had OK income and credit.

I bought the front end of that note from seller for $8500, giving me yield of 30%.

import · March 30, 2005, 3:28pm

Re: Financing a la Merchant? - Posted by Greg(TX)

Posted by Greg(TX) on March 30, 2005 at 16:28:44:

I am just starting to explore this area. Do you use any specific(i.e. seller related) fliers or business cards? I was thinking of puting a flier together then riding the bumps and placing them on FSBO MHs. Have you tried anything like this?

import · March 30, 2005, 4:19pm

nah, John’s too lazy - Posted by Steve-WA

Posted by Steve-WA on March 30, 2005 at 17:19:47:

that’s too much like work for an old guy like him

;-)3

import · March 30, 2005, 6:41pm

Caution, thin ice - Posted by John Merchant

Posted by John Merchant on March 30, 2005 at 19:41:32:

Expect but ignore such comments from WBTE (wet behind the ears)newbies like Steve…hard for some folks to grow up…maybe all that gummint employee bottle feeding.

import · March 31, 2005, 9:12am

Re: Caution, thin ice - Posted by Steve-WA

Posted by Steve-WA on March 31, 2005 at 10:12:05:

Dangit! He figured me out!

;-)3