Florida deal CBS


#1

I have opiton to buy a brand new 1220 sq ft CBS home that the seller would include a quarter acre lot with a 1986 singlewide for the price of 145K in Ocala Florida, mobile rented for 5 hundred a month. So for 145k I can get a new 3/2/1 and income of 5 hundred a month, house alone appraised for 145k so monthly payment would cover both. What do you guys think. Thanks


#2

I live in Ocklawaha, FL.

Infinity Homes inc.

11950 SE Hwy 464

Ocklawaha, FL 32179

352.288.0046 Office

352.216.2020 Cell

Seems high for 1/4 acre and probably pretty crowded. Impact fees paid on both? C.O on each? Zoned for mobile? A1 or R4?

Call me we can chat I’m 6 miles away!

Greg Meade


#3

I did not make it very clear, the CBS home is on a 100x130 ft corner lot, well, septic, 30 year roof, tile kitchen and baths, the mobile is in the same area on a 100 x125 ft lot with well, septic etc, with renter in it. Seller wants me to get mortgage for as much as possible up to the 145K price, but if the house apprasies for less, (lets say 125K then he would hold a first mortgage on the mobile for the 20k and keep my payments to him at 200hundred a month. CBS home is county appraised for 127K and mobile is 50K. he is using the mobile as a sweetner to buying the home. Will call you when I get back home Thanks


#4

Just a note … If the seller wants you to get a mortgage for as much as possible in case the home appraises for less, so that he can hold the $20k mortgage there are several red flags.

One is that if you get a bank loan the bank will of course want a first mortgage position. You seller is not going to get his $20k loan in a first mortgage position as your post indicated.

If you get a mortgage, the bank may well want title to both the home and the land as collateral but perhaps your banks are different in FL for some reason. Maybe your seller is saying you can get a $125k loan on land alone which to me sounds very odd. He would then hold a note (not a mortgage on the mobile home).

When I see seller’s misusing terms in the attempt to put deals together, red flags go up.

Next, if your bank does give you a loan on the property, you would need to disclose to them any side loan you have with the seller.

If the seller is right and the property will only appraise for $125k then the bank if likely to only loan you a portion of that price, say 80% of the $125k, no of the $145k asking price.

Lastly, if the seller is aware that the property is overpriced and offering terms to sweeten the deal then the deal may not be a true deal. Don’t rely too heavily upon tax appraisals or sellers words.

You are the investor. It is up to you to put the deal together. The deal maker is the money maker. If the seller is acting as the deal maker you can guess they are going to be the money maker.

Your mileage may vary but I find that these deals are slow flips at best (if they flip at all). This leaves investors to value these properties by cash flow. I find that in most cases, if I follow the cash flow I can find my personal value of the property which for me, is all that matters.

Just a heads up.

Tony


#5

Garry,

Greg’s offer to look at the deal with you is worth thousands. You will most likely learn more about local RE from him in an hour than you would in a week with any one else.


#6

Thanks guys, I am not in area now, the CBS home which is brand new was appraised by an independent appraiser today for 130K in this distressed market. It is for my son to live in, we are going to wait to see what the gov t comes up with and hopefully get 4 percent or whatever first time home buyers interest rate plus the 7500 or 15k tax credit which is looking likely. Now with the bank the mobile is not even part of the equation, in other words if we finance the CBS home for 130k then at a seperate closing for 15k we get the mobile on the land with a first mortgage from the seller, he holds the deed and title ( it is real estate not chattel). To me it is a no brainer. The seller owes 108K on the CBS home so our new mortgage pays him 22k over his mortgage, he is giving us the mobile for the 15k difference to move the spec home in a slow market. The appraiser is bank approved so it a good legit appraisal as far as I know at this time as it was their appraiser. So rough numbers my sons mortgage with 10 percent down should be around 9 hundred month PITI or maybe thousand depending of insurance. Mobile on the quarter acre is county appraised 50K for year 2008 , rented one year lease (7 months left on lease ) for 500 monthly, so paying him 2 hundred for the mobile out of the 5 hundred leaves son 300 to put toward his CBS home payment either early pay or just to get by. Seller will hold the 15k mortgage at 6 percent and amortize years to come out to 2 hundred a month or more if we want. Again the CBS home is a starter live in home for son not an investment per sec. So if we pay 130k for the home alone and pick up the mobile for 15k it is a heck of a deal. By the way I would close on the mobile first for the 15K mortgage at the sellers suggestion and go thru a title company. I thank you guys and respect your opinion. As my son lives in Ocala and pays 710 amonth to rent, this will get him a home and start him investing , I hope. Any more advice or pitfalls please let me know.


#7

Just to clarify Garry, you or the seller as still misusing basic investing terms which will greatly confuse the deal and anytime there is confusion, fraud can find a home. I just don’t want to see you get scammed.

The bank that finances the purchase of the land (without the mobile home as you wrote) gets a mortgage (also called a deed of trust in some states).

You get the deed to the land at the closing. The seller gives you a deed, they do not receive one.

If the seller chooses to finance the sale of the mobile home separate from the purchase of the land, then it is NOT real estate, no deed is involved. It IS a personal property purchase (just like a car) also called chattel. The seller CANNOT get a deed or trust (mortgage) as the security instrument that secures the collateral. Only land (real estate) is secured by a mortgage (deed of trust).

The seller who finances the sale of the mobile home alone, not part of the land is in essence doing a “Lonnie deal.” They are financing the sale of personal (chattel property). A promissory note for the $15k is created and the note is secured by a lien against the mobile home. In many states this lien is on the title of the mobile home (just like a car) and in some states they us a U.C.C. filing (Uniformed Commercial Code).

I just want to be certain you are clear on what the seller is saying to you so that you can protect yourself. I am not commenting on the deal itself (whether or not it is good or bad).

Greg Meade will no doubt explain all of this in detail and make sure that you are not getting hoodwinked. He is the perfect person to tell you if the numbers are in the ball park or not.

Best wishes,

Tony


#8

Tony, thanks for your input, I have not made the deal clear , my son is going to buy the new CBS home for 130 thousand dollars with 10% down, going thru a bank , a normal house buying transaction, pure and simple. They will pay off the existing mortgage held by Chase bank for 110k or so dollars and the seller will keep the rest. This is the site built home, the land, etc for my son to live in, private residence not an investment. On seperate agreement the seller is going to sell him a 1986 mobile on a quarter of an acre that is rented out for 7 more months with a renter we have talked to who plans to stay in property long term for a price of 15 thousand again with a proper legal tiltle company closing with title insurance, it is recorded as real property with the mobile attached to the land as is common in Florida, my son will own the quarter acre with the mobile home on it. He will own the CBS site built home owing a 117k mortgage at a low interest rate plus the tax break for first time homebuyers. The seller is going to hold a 15 thousand first mortgage on the mobile home quarter acre (now this includes the mobile , which is in fair condition and rented out, and the land) at 6 percent interest, my son has decided to put the entire 500 dollars he recieves in rent payment to pay the mortgage off in about 33 to 35 months, at which time he will own the mobile home and the land , free and clear. I really appreciate your concern and caution, and do not think that in any way this deal in illegal or unethical, or even anything but innovative on the sellers part. In other words, we are buying a home appraised for 130 thousand for 130 thousand financed thru a bank as anyone else would. On a seperate closing we are going to buy the mobile and land for 15 thousand paid back by a first mortgage terms for approx. 33-35 months. We are going to pay all the closing cost including title insurance on the mobile deal.Sorry so wordy, but I do respect you guys opinion . Given the above facts, I see no downside or fraud or any unethical issues involved . The seller is quite frank and honest he wants to get rid of the CBS home as taxes and insurance are about 3k to him and is upfront that he is giving us the mobile on a seperate closing to make his CBS home a great deal. Again closing on the mobile ahead of house closing so seller is trusting our integrity to close on the CBS home after we secure the mobile, which of course we will. Again any comments, thanks for the reservations you have, We are not naive new babes in the woods, not into deals like you, Greg all the rest of the people here but to me this is a great deal. love reading all the post here , for info and knowledge. Great concept on this site, I aplogize for not making the terms and the guts of the deal clearer. My intent besides your opinion was to show that an innovative package can create what I think is a win win situation. Would we purchase just as an investment, the answer is no, but with my son and his wife living there, and having an investment it is a winner for him. Thanks again


#9

No offense, but it appears that you have your mind already made up and are looking for someone to give their blessing so that you feel better entering the deal.

If helping your son is what you want to do, great. If you are approaching this as a pure investment, I would listen to Tony’s and Greg’s advice.

In the end, I hope that whatever you choose works out for the best.


#10

Thanks for your advice, you are right I was just wanting some validation on the deal, I thank all of you. I just did a terrible job of explaining the details, to sum it up my son is buying a 1986 mobile home in fair to good condition on a quarter acre lot in central florida for 15 thousand dollars that is currently rented bringing in 500 dollars monthly.The seller is holding a first mortgage for 33 to 35 months at 6 percent payment is 500 month which is the rental income. My son wants it paid asap as his income is good now.In 3 years he will own it free and clear. Thanks to you guys and checking this board regularly we know this is a good deal. My son would have bought the home anyway for 130 thousand as it is just 100 more than his rent. I know Greg would agree that a quarter acre , impact fee paid, 1986 mobile appraised for 50 k by the county is worth 15 thousand especially with seller holding the mortgage. I appreciate your caution and desire to insure that the deal is there, there are a lot of people who are naive. On the other hand I see a lot of good deals sitting because people will not buy now, otherwise we would not get above deal. Again thanks to all of you, you guys are real.