MH Notes/ buying selling - Posted by Mike

Posted by David Butler on December 14, 2002 at 14:27:09:

Hello Mike,

You defintely are thinking along the right track, but there is a lot more to answering the myriad of questions you pose here, than a simple discussion thread can answer for you. However, a couple of pointers that should help you get started…

To buy or sell an MH note, you’ll first want to consider the implications related to several important factors, including:

  1. is note secured by both home and land, in senior position, or is it secured by a “freestanding” MH in a park or on land not owned by payor??? Big difference in risk rating and pricing;

  2. year/make/model/dimensions/condition of home.

  3. if in park, park rating;

  4. strength of Payor (credit, income history);

  5. down payment Payor made going in;

  6. intangible in-place value of home;

  7. local demographics;

When buying or selling a note, you can do it directly with the note holder as you suggest, though you would want to meet together in that circumstance at the local titling agency for the state where the MH is located, for exchanging funds and perfecting your lien… so you can handle that right at the same time. My personal preferred method is using escrow company, due to saving time in most cases.

You can collect the payments yourself, though I recommend considering a third party collection agency (such as North American Loan Servicing for example) for several reasons - particularly if investing in more that one or two notes over time. This service saves a great deal of time, provides third party collection and late pay servicing, and provides clear, neutral payment records in the event you ever decide to sell any of your notes before they payoff.

Your attempts to convince a Payor to accelerate his paydown of the note is accomplished in two ways… his capability, and you simply showing him the benefits. I accomplish this frequently with my own MH investments, and it is a real bonus in yield enhancement, as well as strengthening the paper. As far as contacting, not sure I follow you there? Phone? Letter? Personal visit? I use all those approaches!

Partials are more complicated, and much too lengthy to try and discuss here, but there already exists a great deal of discussion on partials in general here in this forum, so you can easily “search” for the concepts by way of using the “search” facility located at the top of the board. But no, a new note is not created.

Escrow costs will vary, according to the nature of the deal. On my MH note purchases, I budget between $400 to $500 per note, including titling, lien perfection, and escrow fees; slightly less if portfolio purchases.

As for finding MH notes, both approaches you suggest are recommended, and Lonnie dealers are a great resource for MH notes, particularly with partials.

I’m going to also strongly suggest here that you obtain a copy of TIN CAN ALLEY (The Complete Guide to Making Money with Mobile Home Notes), available here in CREO’s bookstore at:

TIN CAN ALLEY offers 400 pages of highly detailed information that fully addresses each of the questions you ask here, along with providing specifics of risk evaluation and management in MH note purchases, legal considerations, partials, other deal structures, forms, checklists… the full boat.

There is also some very helpful 3rd party discussion on the value of the course found in previous threads in this forum, which can easily be reviewed by entering “Tin Can Alley” as your keywords in the “search” facility at the top of this forum!

Hope this helps, and best wishes for your success!

David P. Butler

MH Notes/ buying selling - Posted by Mike

Posted by Mike on December 03, 2002 at 19:53:52:

I just posted this tothe MH board and thought id post it here too…


I have a couple questions about buying and selling MH notes. With the start of next year i will have some extra monet available(few thousand) and would like to try investing in MH notes. My question is when buying a note how is the note sold? Do they just sign it over to me, with or without recourse and i collect on it? Or would there need to bee some escrow/service account set upto receive the payments. How would i go about contacting the note payor to try to get them to pay it off sooner etc? If a partial was bought or sold whow would this be done? Would there be a new note or? Also if an escrow or service account is need what would the cost run, considering i would have only a few thousand dollars and any service charges would cut into my profits. Also i was thinking of placing an ad in the classifieds under MH hopefully a Lonnie Dealer would have some notes to sell whole or partials on. Would this be a good start or should i find a note broker? If anyone could answer my questions or point me to a link with the answers i would greatly appreciate it.

Thanks, Mike