Seller Financing On A Mobile Home: What Rate?
I am going to sell a mobile home that I bought for cheap and rehab'd. Price will be in the ~$12K neighborhood (FMV). At this price it should go pretty fast - lots of mobile home buyers in the area. I plan on getting 10-20% down and seller finance the rest (if necessary).
The question is: what is a typical interest rate and term for a mobile home sale? It's not a car, it's sort of a hard money loan (secured by the collateral), it's not a mortgage..
Ideas welcome.
Molotov
I would say 10% for starters, and adjust to the credit of your buyers. If you were to ever want to sell the note to a note buyer, the higher the interest the better the buy.
John
if you are doing a Lonnie deal,then the standard is 12.75%
OK, I havent heard that one yet...what is a "Lonnie" deal?
Molotov
I've seen MH sales contracts with interest rates as high as 30%, but most seem to be in the range of 12-15% in my state.
While my state of WA has NO usury rate cap on owner carryback of any note on any personalty (any non-RE property, including jewelry, cars, bikes, MHs, etc.), this certainly is NOT true in all other states, so before a seller gets carried away he should check his local laws to see what is & isn't legal.
And of course in the usual Lonnie deal* ), we're buying them for a little and selling them for a lot more, comparitively, so we might well be selling at zero interest, but making a heck of a profit.
Get & read Lonnie Scruggs' book, "Deals on Wheels", which is the how to do it manual on buying and selling wobbly boxes
Well Hi Auburn ...
I have sold alot of mobiles in Placer County and even carried the loans for about 10 clients. I have sold about 20 mobiles for a park in Foresthill by the park's owner to get them out of the park's name just before he sold the park.
All the rates have been 10-14% interest, just in the past few years and even months. Sure beats the interest rates banks are providing ... Say you get "all cash" then run to your bank to put it in a time certificate.
The length of the note can depend on you and the buyer. But I always felt anything past 5 years. The loan amount you will be dealing with is small ... but maybe your buyer can not afford to high of payments.
A side note on owner fiancing is ... do not close until the buyer has given you proof of insurance on the mobile home for "replacement" not just the $12,000 sales price. That is if the unit burnt down by electrical fire (like in Edgewood 2 years ago) your owner financing note just got burnt also. Frank at In-State Insurance is the best ... he get all my business 888-639-4116. Also you will be placed as "loss payee" or "mortgagor". So if there is a pay out from the insurance company ... your name is on it also.
Cheryl Lopez
[ Edited by cheryllopez on Date 01/29/2004 ][ Edited by cheryllopez on Date 01/30/2004 ]