Looking at buying a park and some of the homes have notes. There have been some good posts that essentially say discount to present value using a rate of 15%-20%. Most of the notes are new like 6 mos or a year into a 6 to 8 year note. I don’t want to pay for 7 years of an 8 year $20,000 note knowing odds are the tenant will bail in two years on average. What do you suggest?
I have read a good post suggesting to buy partial notes. What happens to the part you don’t buy? If you by the first 3 years, does the note revert to the seller in the 4th year? What happens if the tenant defaults? Who gets the home or is responsible for getting rid of it?
How many years of a partial note should one buy? Just the first 2 years because they will be gone? Just the first 25% of the remaining note life or what? Buy as much as you can as long as it is less than the value of the home discounted? As an earlier post said: “I’m in the land of hell now.”