Thank you SO much for your informative response. I appreciate the detail you showed in the strategies you set out for me to get my foot in the door with lenders.
I definitely am trying to “repair” my credit each year. That’s why I closed most of my credit card accounts and worked deals with them on a lower APR with guaranteed auto-draft payments to pay down the balances. Like I said, I only have 2 that still remain open, but the closed ones will take 2-4 years before they are all entirely paid off.
I will do some research on preparing financial statements, like you said. That way I can make myself more attractive to lenders for a loan. I have about $24k in retirement money in a 403b account that I’ve used before to purchase a MH, but I won’t be eligible to loan against it again for another 10 months, so that doesn’t help me this spring/summer.
I just hate not being able to do anything about it NOW. It makes me feel like I can’t GOTC and do a deal, even though I want to. That’s why I was hoping to find a private individual on here.
Anyway, thanks for the advice, and hopefully my determination to get this done won’t let a little thing like lack of liquid assets stop me.
Does anyone know of any companies, individuals, or websites that offer hard money loans of $5-20k. All the ones I’ve found online only do deals of $50k or higher, and NONE of them will loan money on used mobile homes, most do only SFRs or commercial properties.
I know private individuals at REI clubs are one source I could look into, but the REI clubs I’ve found in my area have meeting times that conflict with my schedule. I have a potential deal lined up but need more capital to get it done.
I have 3 completely paid off (title in hand) large singlewide MH’s I have as rentals (as well as 3 more that I have at least 50% equity in) that I can use as collateral to “secure” the hard money loan. I’m willing to pay 10-15% interest if I could get someone to finance it for 5 years or less.
Re: Finding Hard Money Lenders on MHs? - Posted by Daphne Lowe
Posted by Daphne Lowe on February 03, 2007 at 20:04:49:
Donovan, the problem is that there really is no such thing as hard
money lending against MHs. Unlike real estate, MHs typically don?t
have enough value to be sufficient collateral for a loan of any
meaningful size. What?s 65% LTV of the wholesale value of a typical
Lonnie Deal? For the $5-20k you?re looking for, the homes would have
to be worth $7,700-31,000. So at the lower end, the home would need
to be a nice DW no more than 5-10 years old, and at the high end, it
would need to be a brand new home! Remember also that there is not
as readily developed market for the HML to unload a MH as there is for
real estate. Because the collateral is subpar, chattel lending is riskier
and therefore more relationship or credit based. Your best bet for
getting money is going to be local investors/institutions that want to
work with you because they believe in you and your business model.
Work on developing a good rep, and the money will come.
Thanks for your response. I know it’s going to be hard to find a hard money lender willing to loan against my mobile homes, but that is why I am offering to put up 5 of them for a loan of about $15k. They could easily get $5k a piece or more on the wholesale market for each of these 5 homes by selling them to Lonnie dealers in the UNLIKELY event that I can’t pay back the loan in 3-5 years.
I don’t think I’d have much luck going the bank/insitution route other than getting a $500 unsecured line of credit, because I have a FICO score of only 567, due to a high debt to income ratio. I have 6 rental properties all together. The 3 I listed earlier are owned free & clear and the other 3 are a duplex (I live in one side and rent the other out, but still have 16 months before I reach 20% equity to qualify for a HELOC)and 2 owner finaced mobile home on land deals. One of them will be paid off in 4 years, the other in 6 years.
So basically, the rental properties have been my savior and my downfall (credit-wise) at the same time. That’s why I believe I won’t get far with a bank loan, nor with credit cards, since I closed most of my cards to pay down the debt (old college debts) on them to improve my credit. I only have about $2000 available on the 2 credit cards I kept open, plus the good 'ole Home Depot card that any investor needs.
So how do I develop a good rep with lenders when they’ll push me out the door as soon as they run my credit report, which will bring my score down even further for the next bank I walk into?
Re: Finding Hard Money Lenders on MHs? - Posted by Daphne Lowe
Posted by Daphne Lowe on February 06, 2007 at 08:24:41:
I thought that I understood what you were looking for, but now I?m not
so sure. From your post it seems like you want a 15k loan, DUE in 3-5
years? I assumed you were looking to make payments on an amortizing
loan using the income from the rental properties. I?ve never heard of
anyone doing the former in this niche, but there?s always a first…
Either way, the answer is the same, MHs are weak collateral, so the task
you have at hand is to convince someone to believe in you enough to
loan you the money. Its their trust in you (and your ability to
successfully ply the trade) that will drive the transaction, not the
supposed value of the trailers. Your best bet is probably to hook up
with an investor who understands this niche and is looking to make a
passive investment. If you can?t find them locally, network at some MH
conferences and boot camps. Get out there, press some flesh and tell
When you find someone who will lend you money, treat them like gold.
Make sure you pay them according to your agreement, no matter what.
It is much easier to repair your fico than it is to repair your reputation
within this relatively small community, so don?t screw it up.
I had the same problem with many items on my credit dragging score down but worked to get it up a little bit.
Your 576 score if u can get it massaged into the 620 range would be a good enough average to get conventional bankers to take u seriously. Its only 44 points higher you need to get to.
Keep trade lines under 50% of there limits, pay on time with loans and trade lines and maybe get another trade line even if its secured. The fact you have 3 homes paid off is huge. You need to create an executive summary or a financial statement that shows your assets. Once you have this on paper in a professional format and can bring this and 2 years of tax returns into a banker it will go a long ways. Have an entry and exit strategy to the debt you seek from your banker.
Also find a local portfolio banker to work with. A portfolio banker holds loans and credit lines in house and often will have lower lending critiera. The financial statement you might get the assistance from a book in the library on writting financial statements.
Borrowing does require some song and dance on your part as to the ability for you to proove you can pay back what you borrow. Confidence in front of a lender as to your plans help too. 15 years ago when I borrowed on my first home I made trips to 5 lenders before one would actually take a risk on me. Also activity on your credit report should be minimal dont pull a report every 60 days or apply for credit over and over. Its better to pull one report and use it to show a few lenders to get a yes out of em before you actually have em pull your credit report. Too many hits on your credit report can hammer your score down. Good luck
Your first assumption was correct. I am looking for a loan to make monthly or quarterly payments on, and have the balance paid off in 3-5 years.
I do understand what you are saying though. I’d like to attend a boot camp or ohter function to network, but I’m trying to save up all I can to do deals on my own later, in the event that I can’t get them done now with an investor.
Thanks for your sound advice though. I appreciate those of you willing to take time to put your “2 cents” in on my situation. In the meantime, I’ll keep looking for a way to make this happen sooner, rather than later.