My 1st deal , Please Help!! - Posted by Shane B.

Posted by Lyal on February 12, 2003 at 10:36:10:

Just FYI… you’re placing your posts incorrectly. You’re replying to the reply. You need to back up to the original post.
Also, don’t agree about selling the note on this one. I’d renegotiate with the buyer after I got some comps. After that it’s pretty easy to refinance with the bank and pull more cash out.
All the best, Lyal

My 1st deal , Please Help!! - Posted by Shane B.

Posted by Shane B. on February 10, 2003 at 22:58:16:

I posted this on the main news group, but got no replies, so I’ll try here. I’m buying a mh with 1 acre land already set up. Asking $20,000 I got it for $18,000, I know it’s not much of a discount but it was a steal at that price. I have an elderly gentlemen who wants to buy with me financing it for him. We agreed to $25,000 with $1,500 - $2,000 down at 10% for 7 - 10 yrs. (he said I was doing him a favor, so told me to structure it how I wanted). He said he could pay around $350 - $400. I got so many numbers in my head I can’t even figure out how much I will profit. My payments will be around $170 for 10yrs. Is this a good deal? I have to put 20% down to the bank, but it’s going to come from a credit card, so I will have no money out of my pocket. How should I structure this deal to work best for me and the buyer?
Thanks, Shane

Re: My 1st deal , Please Help!! - Posted by Tarheel T

Posted by Tarheel T on February 11, 2003 at 20:07:18:


I just did a mobile/land deal with the same purchase price as yours. Here is how I structured it:

My Purchase price: $18,000.
“Sold” on Lease option for $39,900 with $1,000 “down” as non refundable option consideration and monthly payments of $450. Buyers to pay all utilities and upkeep on property. And in all likelyhood this will turn out to be just a rental because tenant buyers rarely actually buy. (Simile)

This is my first mobile home deal. I have lease optioned sfh’s successfully for years and it seems that this system transfers perfectly to mobiles(the numbers even work out better with mobiles).

Tracy Thompson
Asheville, NC

Re: My 1st deal , Please Help!! - Posted by Tony-VA

Posted by Tony-VA on February 11, 2003 at 07:48:11:


In my area, your land/home package would have been a decent deal. But your sell price seems quite low if the $18,000 you negotiated was truly a “steal”.

A seven grand discount from fair market value is not really a steal. To many things can come up and eat that profit away.

If you were flipping this property tomorrow for $7k, that would be one reason to keep such a low price, but bear in mind that owner financing merits a much higher sell price. This is accomplished by creating affordable monthly payments for the buyer.

Since you are coming up with the down payment via credit card, you have done a no money down deal, but leveraged yourself on high interest, short ammortization. Granted it is not a lot of money, especially if you immediately apply the buyer’s down payment to it, but this is a poor habit to get into. Buying a long term property on short term financing terms has broken more than one “no money down” investor. Just keep it in mind. Probably not a threat on this one but could be on future deals.

I would suggest you find out what the market price for this land/home package might run. Then bump it a few grand for the owner financing.

You might also consider a lease/option deal. This gives you an opportunity to lease the propert with little to no landlord headaches while allowing you to ask a slight premium in price. You could then assist the buyer in obtaining financing through a bank or mortgage broker to cash you out sooner.

Much depends upon what your exit is. If you are simply looking for payment streams, then bump that price, increase the payments or work the terms so that you do receive a long term income stream and one that is worth your investment and time.

That is why I love these land/home deals, so many exits that can solve problems and make you money.

Best Wishes,


Don’t be so quick to sell the Golden Goose! - Posted by ScottS(NC)

Posted by ScottS(NC) on February 11, 2003 at 07:20:09:


Why not rent the whole package for awhile, build up some equity, then if and when you are tired of renting sell of just the home and rent the dirt. This is the way you build a retirement plan for yourself. Flippers rarely retire they have to get the next deal to pay the bills. How about 10-20 of these type of propertys all putting $200 positive cashflow each month into your pocket? See how easy it would be to quit working once these babies are paying you forever. Just some food for thought. Take Care ScottS(NC)

Re: My 1st deal , Please Help!! - Posted by Ryan_MO

Posted by Ryan_MO on February 11, 2003 at 24:00:06:

Here you go, try this:

$25,000 purchase price
$2,000 down
$22,000 @ 10% for 10 years gives a pmt of $303.95/mo. That is well below what he said he could pay. Since he said to structure the deal how’d you like, and you are doing a seller finance deal, you can get more than 10% on this deal. I’d suggest trying 12%-15% like is used in a Lonnie Deal, which is essentially what you are doing.
Using 15%, his payments would be $371.07/month. When you tell him the terms, just tell him what his monthly payment sare and he’ll be happy. Also by extending the financing out over 10 years, rather than 7, you will be making more in interest charged, increasing your yield, shoot for as long a term as he will allow.


Nice deal! - Posted by ScottS(NC)

Posted by ScottS(NC) on February 12, 2003 at 07:31:59:

Hey Tracy,

Sounds like a good deal! Congrats. How’s everything going? Take Care ScottS(NC)

Re: My 1st deal , Please Help!! - Posted by Phil Pelletier

Posted by Phil Pelletier on February 12, 2003 at 02:11:16:

All these folks have great ideas for long term money making. In my opinion you need to sell the note on that place and cash out on that deal and go for a better one. You probably let the cat out of the bag when you locked yourself into a 25K sales price with your buyer. If you had sold it for $36,000 and kept the contract for 10 years, his payment would have been affordable and you would be geting some great cashflow for your investment. However, buy selling for 25K, you will have a tough time making enough money on this sale to justify holding the downpayment on your credit card. I sent you an e-mail about buying this note, getting you an immediate cash profit and allowing you the ability to go out and find another deal like this one and pricing it right and making some good money. No offense, but I think you will do better next time if you can get your cash out of this one quick.
Phil Pelletier
PS I sold my first house at a lose, but I did great with the immediate cash and my new found education in what to do with it!