We are in negotiations on a park that includes 4 mobile home notes with a balance of about 47k , original balance was 62k
1)First question is what type of discount should we be offering from what i have read we should discount it about 25-50% of the existing balance or whatever the homes are valued at(all late 90’s single wide)?
2) if the seller underwrote the notes himself and they don’t comply with Dodd Frank , as I believe they were all issued ion the last 5 years , then what? State is AZ
I would consider converting these people to a rent credit program. The legislation for Seller financing personal property is not limited to DF. There is FInCEN and other lending requirements which in my opinion are terribly prohibitive to doing a simple contract for deed.
There is a lot of work to get these notes into compliance either way, and at least 50% seems logical, maybe more depending on their terms and if they seem predatory.
You didn’t originate the notes so it’s always been my understanding that you can honor them.
I would offer between a 40-50% discount as long as it’s less than the wholesale value of the home. If the seller wants to push back on this, have him walk you through the underwriting he did to screen the residents. Hopefully he did credit/background checks and verified employment. If he did, you may be able to give a little more for these.
Tell the seller you are not interested in purchasing the notes just the community. He can continue to collect on the notes or pass them along with the community purchase at a major discount.