It can be for any term and price agreed to by you and the purchaser. However, make sure you are familiar with Regulation Z (put it in your search function for info) and your state usury rate.
Step #1 is to get and read Deals on Wheels, so you learn the business from the expert who really invented the whole business of buying MHs cheap, for cash, then selling and carrying the notes.
There is NO rule about how long your buyer's note might be, and my main concern is how much the buyer can afford each month in his/her total payments.
Remember the buyer has to pay MHP rent, utilities, taxes, insurance....and your note payment. And still have enough left to live on.
If he/she only brings home a check for $1500, but all these payments cause him a monthly outgo of $1300 (for example), he's only got $200 for living expenses...and how long's that going to work before he gets in real trouble?
I normally start by figuing what the buyer can pay, in total of ALL those expenses each month, then calculate what his maximum note payment to me can be, at the interest rate I set...that then dictates the length or term of the note.
e.g., if he is giving me a note for $10,000, but can only afford to pay a note payment of $400 each month, at an interest rate of 10%, what does your fin. calculator tell you the length of that note will have to be?
On long notes, is it really realistic to expect somebody to pay a note of 15-20 years on a depreciating piece of personal property?
So I normally don't take real long ones as I feel it's total fantasy to expect a buyer to still make payments long years from now when his MH is an old worn-out tin box.
I've read both of Lonnies books and they are great. It's given me the confidence to proceed. ...but he never dealt with the question of making a loan longer then 5 years.
The reason I was asking was - to be successful I know I have to create a loan that is a win-win situation for both parties. I do this with the house I've sold on Notes and it's worked really well.
Whether they will make payments on a depreciating piece of property is up to them. If they decide to sell or get out of the contract after 10 years on a 15 year Note then I'll simply buy it from them at a low price like Lonnie says you should do. Some of his best deals came from homes he purchased that he had sold to the owner.
It can be for any term and price agreed to by you and the purchaser. However, make sure you are familiar with Regulation Z (put it in your search function for info) and your state usury rate.
Good Luck,
Shawn(OH)
Step #1 is to get and read Deals on Wheels, so you learn the business from the expert who really invented the whole business of buying MHs cheap, for cash, then selling and carrying the notes.
There is NO rule about how long your buyer's note might be, and my main concern is how much the buyer can afford each month in his/her total payments.
Remember the buyer has to pay MHP rent, utilities, taxes, insurance....and your note payment. And still have enough left to live on.
If he/she only brings home a check for $1500, but all these payments cause him a monthly outgo of $1300 (for example), he's only got $200 for living expenses...and how long's that going to work before he gets in real trouble?
I normally start by figuing what the buyer can pay, in total of ALL those expenses each month, then calculate what his maximum note payment to me can be, at the interest rate I set...that then dictates the length or term of the note.
e.g., if he is giving me a note for $10,000, but can only afford to pay a note payment of $400 each month, at an interest rate of 10%, what does your fin. calculator tell you the length of that note will have to be?
On long notes, is it really realistic to expect somebody to pay a note of 15-20 years on a depreciating piece of personal property?
So I normally don't take real long ones as I feel it's total fantasy to expect a buyer to still make payments long years from now when his MH is an old worn-out tin box.
I've read both of Lonnies books and they are great. It's given me the confidence to proceed. ...but he never dealt with the question of making a loan longer then 5 years.
The reason I was asking was - to be successful I know I have to create a loan that is a win-win situation for both parties. I do this with the house I've sold on Notes and it's worked really well.
Whether they will make payments on a depreciating piece of property is up to them. If they decide to sell or get out of the contract after 10 years on a 15 year Note then I'll simply buy it from them at a low price like Lonnie says you should do. Some of his best deals came from homes he purchased that he had sold to the owner.
Thanks for your help