New investor needing education on lease purchase deals. I have found a mobile home dealer here in nevada who has rehabbed a single wide trailer on a private lot that has a buyer for the trailer wanting to purchase the trailer but they can not find a bank that will provide financing on an older single wide trailer. Buyer has fica score of 804 and 20 thousand dollars for down payment.
My idea is to buy the trailer and lot from dealer with cash, then resell trailer to buyer on a lease purchase contract which will let me hold title to the land and trailer for over a year to make this a long term capitol gains project and to do it inside of my LLC to avoid self employment taxs.
If I buy the trailer for $60,000; all cash and then resell for $70,000 with $20,000 down, I will create a note for $50,000 @ 10% interest for 15 years then payments for PI would be $537.30. My yield on this note would be 14.17%;…right???
Questions are …
What am I missing? Are my numbers right? And is this worth doing or is there something else I can do to improve my numbers? Anyone know of any NV lease purchase problems that would make this blow up in my face?