Posted by shawn sisco on October 04, 2008 at 11:52:44:
Mike, I have sold some homes and now have some notes, and still have some vacant lots to fill. Now I can sell the notes to get cash to buy more houses, or I can borrow through the bank to buy more houses. My topic of conversation was to find out if others have developed reliable private $$ instead of using banks. As you probably know used mh’s are not the colateral of choice for most banks. Additionally, with the supposed tight supply of bank money available to lend, it seems to be advantagious these days to be able to operate without dependance upon banks.
Posted by shawn sisco on October 02, 2008 at 18:41:02:
I hope this post will prompt others to respond with their experiences in dealing without using banks. I read an article by Ray Alcorn written some time back â??he stated something to the effect that the mode of operation for MH dealers was basically a captive one, of â??working for the lenderâ?? with floorplan and retail being interwoven. Well, as I stated this piece was written a while back, I was a participant MH dealer, and Ray was accurate in his assessment of the MH dealer biz. When the lenders could no longer sell their paper, the lenders quit. Ray had advocated MHP in- park sales using private $$. Now I have had a good working relationship with local banks for many years and for the past 8 years been using a LOC with the MHP as colateral. Now with so many clamoring for .gov bailout and bank lending allegedly constrained, I canâ??t help but believe that private money deals with local, personal acquaintances are the better way to go to obtain $$ for MHP infill â?? and probably most other capital requirements too. My experience in selling MH notes is limited, but I have done enough to see that it is definitely do-able. I wish to hear from those who have used private $$ and what successes or failures, advantages, disadvantages came of it.
Posted by Anne_ND on October 03, 2008 at 09:44:32:
Shawn,
This is a people business. You need to ask everyone you know if they’ll lend you the money. Lots of folks have cash sitting around wishing they were getting better than 3% in a money market.
My best investors have been with me since 2002, and I call them up and say “I need $x” and they send it to me in the mail. We work out the paperwork after the fact. At one business lunch an investor told me “I’m not investing in mobile home notes, I’m investing in the bank of Anne_ND”.
Some tips on keeping your investors happy:
-be generous with the interest rate
-provide them with the paperwork that they need, not just your usual paperwork
-take the time to explain the asset class
-make your payments on time
-underpromise and overperform
-protect their interest (I got a life insurance policy so that my heirs can pay off all loans if I croak)
-respect their privacy, absolutely
I think the things my investors like best is the personal guarantee I offer, with full recourse and full service. In other words, if I get paid by the underlying buyer, my investor gets paid. If I don’t get paid, the investor still gets paid, and doesn’t have to be part of the drama of what’s going on with the payor [i.e., they don’t care that your payor’s girlfriend’s tattoo got infected and they had to take her to the emergency room to remove her belly button].
Be smart about how you borrow money- allow yourself a cushion between what you get paid and what you pay your investor so that you can pay them if you don’t get paid right away- in other words, be sure your business model turns a healthy profit for you. This is important to savvy investors, that you are smart enough to ride out the tough times.
Re: Private $$ for MHP infill - Posted by Linda Nagai
Posted by Linda Nagai on November 09, 2008 at 14:41:11:
Anne, I was noticing your posting and I am impressed with your sources. I am in need of an investor who will carry a note on my mobile home which is located in a 5 star park in California. It is worth, at this time, $89,000.00 and I need to find an investor who will invest %50,000.00 to pay off my note which is due in May. It is a great area and a good investment.to the I could pay good interest to anyone willing to help me. My fico is 645. Please let me know if there is anyone who could help. Thanks so much…Linda
Re: Private $$ for MHP infill - Posted by shawn sisco
Posted by shawn sisco on October 08, 2008 at 19:16:39:
Anne, I appreciate your advice. I have just begun obtaining private $$, and like everything else Lonnie wrote, I have found more $$ available than deals.In fact that is my current situation. My investors wants all the notes that I have -$150k, I’m concerned I’ll be 6 months buying-moving-setting-selling the houses. My investor doesn’t want $15k-$20k onesy, twosey, which is what I would prefer. Also, would you rather work with individual investors as opposed to banks under all conditions.
Re: Private $$ for MHP infill - Posted by mike barlow
Posted by mike barlow on October 04, 2008 at 11:04:05:
How would this work on the above deal I’m working on? Investor gives
me the $19000 to buy the mobile home and I pay him what interest?
Banks charging me 7.25% what rate would I give the investor? and why
do it instead of just using the bank? Mike
Posted by Anne_ND on October 09, 2008 at 06:10:52:
Shawn,
Don’t let the investor, who will be making very good money on your deals, determine your business model. Remember, you’re in charge, and make your decisions such that you will profit and grow. Ultimately this is in both of your best interests.
I would always prefer investors to banks, mostly because of the crazy language in bank notes- have you ever really sat down and read the fine print in a mortgage or line of credit? The “boilerplate” is outrageous in what the bank claims it can do. Having said that, I do use both bank money and private money.
Posted by Anne_ND on October 07, 2008 at 05:30:50:
I use private money when I’m buying wholesale and selling retail. You’re a motivated buyer, so no, it won’t work for you. I’m impressed that you have a banker who will lend any kind of money on a mobile home that has to be moved.