Mobile Home Noteholder wants to sell note - Posted by Steve-TX

Posted by Tim (Atlanta) on July 17, 2001 at 06:47:52:

If there are 120 payments left at $739 per month and you pay 38k for the note, you will get a yield of about 20%. Is that good 'nuff for you? Only you can decide that.

Your local investor does have a point. The mobile home has and will continue to depreciate rapidly for some time to come. That is why Lonnie proposes that you buy mobile homes that are 10-20 years old. By that time most of the depreciation has already happened. Do you know how much you could sell that property for if you offered owner financing? Would it be more or less than the $38K you are paying for the note? Around here, it would likely be more like $50-60k minimum, sometimes more. You will have to guage your own market. If the mobile home buyer defaults, you could just sell it again.

The note has some strong points. It includes the land. Mobile home and land package notes are more much more marketable than simple mobile home notes. Plus the note has some payment history. Hopefully the 2 years the note payor has paid have been on time payments.

As for your cash flow, if you put $10k in the note, how long would the note seller finance the other $28k? At what rate? If you were to finance the $28k at the same 10.5% interest she is getting now over the same 10 year term, your payment to her would be $377.82, giving you a monthly cash flow of $739 - 377.82 = $361.18 for the next 10 years. If she wants to finance for a shorter term, say 60 months, your payment would be $601.83. Your cash flow for the first 60 months would be small ($137.17), but for the next 60 months, you get to keep all of the $739 per month.

One other idea : Have you offered to buy her out for cash? Maybe she would come down a good bit if she could be done with the whole deal. You could broker the note to another investor, keep the cash difference and move on to the next deal. Just because you contract to buy the note doesn’t mean you have to keep it. You could list it on a note selling service ( for instance) and see what offers you get for it.

Mobile Home Noteholder wants to sell note - Posted by Steve-TX

Posted by Steve-TX on July 16, 2001 at 22:43:36:

Got a call today on my “We Buy Houses” ad. Woman sold her 1996 double wide mobile home on contract for deed for $60,000. She owned it free and clear and also owns the land, appraised at $17,000.

It’s a 12-year note with 10 years left. $739 a month at 10.5% interest (does not include taxes and insurance). Quick calculations tell me about $88,000 in total payments remain. She’s moving and doesn’t want to have to worry about collecting.

She wants $38,000 for the note, will take $10K now and finance the other $28K.

Besides the fact that I’m new at this and don’t know how to come up with the needed money to do the deal even if I decide it’s a good deal, another local investor warned me that the buyer might decide in a few years that $739 is too much to pay for an older mobile home and move on, leaving me with a piece of collateral that’s not worth so much anymore.

Can anyone offer any thoughts on this, and if this is a deal I should go for?