If not the 21st CASH system with their licensed originator, then how to sell new homes like Legacy’s where their in house 75% financing is to the park, how does the park put buyers into those homes and be Dodd Frank compliant?
How are folks filling empty pads with new homes if the high expenses of 21sts CASH program results in too high of a total monthly to work for your area? See the other CASH threads. I posted my first hand experience with our first 2 truMHs homes in on the CASH program.
21st did it right using licensed loan originators. But Legacy just for example finances to the park, leaving the park facing the dodd frank lending to the occupant issue?
I just don’;t see a rent credit program for a $25k home + setup $8k including AC working out where folks actually end up buying a home. Or looking too much lending to occupants when we might have 25 of these in the park. I’m waiting for some state to start going after parks doing a lot of these concurrently.
I think a few rent credits on older used homes that the title is transfered in 3 yrs is getting over looked by the states and CFPB. But 25 homes at $30k of rent credit payments each, that’s a bigger target I feel.
My answer, which most people here don’t like, is to hire a professional to handle it for you. In my case that means an attorney. I have my attorney working on the contract right now and my manager getting a home all prettied up for sale. We shall see how it goes.
I got approved for the CASH program but the quote on a home was much higher then I was told a year ago. For their most basic 3br model that can be shipped to South Dakota works out to something like $750 a month for 15 years. Yikes! hope I am wrong on this point but that looks like a hard sell to me.
If I can move in used homes for $20k, I can sell them for $3k down and $641 per month for 4 years, with me holding the paper. That seems much more doable.
Spencer Roane gave a very, very detailed hour long presentation last week at the George Allen Roundtable conference in Nashville on the system he uses in the four parks he owns - which is leasing with an option to purchase. He is an electrical engineer, not an attorney - but the system he uses was created by his attorneys. He presented both the legal reasoning for why this method is legal, and historical data in his own parks for default rates.
His lawyers feel this method is Dodd Frank and SAFE Act compliant. Essentially he leases a new home to a resident for X years, and then at the end of that time he allows the resident to purchase the home for Y dollars in cash, or for a period of more payments. When the resident elects to purchase the home at the end of the lease period, if they make payments Spencer simply gives them the title - so he is not holding a title in return for mortgage payments. He’s comfortable with this however because he has collected many years of lot rent and home lease payments - so he’s way ahead. The home buyer at this point has also paid many years on the house and is unlikely to default - and even if they do he has still made a lot of money.
I could never in a million years sell something like this in my park, so I sympathize with you. What I think I will probably do when I face this is to make the payment $600 or $625 (which seems do-able to my customer base), and then allocate $50 to lot rent and the rest to paying off 21st. It would be an RTO, still, with just one payment. In this manner, I get something towards lot rent and the occupant pays off the underlying loan years faster compared to a normal amortization schedule. I checked with 21st and they said the loan could be pre-paid with no penalty. Everyone gets something out of a deal like this. I don’t get as much as I want, but my park does fill up.
@Ivan_ilych, this sounds very promising. I Googled Spencer Roane and George Allen Roundtable, but I did not find specifics of the presentation. Please tell us more.
B.t.w. The Death of Ivan Ilych is one of the best books I have read
