21st. CASH Program Question

Participated in the 2015 Summit and heard about the CASH program. Received an overview of the three programs, ran the numbers on a “what if” and now am wondering weather the benefit to me is worth while. Certainly like the idea of another mh in park, however, 21st. sets a limit on  the sales price (then takes 50% of the profit): most  of the new lot rent is paid to 21st. for buying down the interest rate; and then  limits the term of the finance note to ten years, which pumps the payment.  There is a lot of meat on the bone for the big dog, but not much meat for the little dog.  Someone please tell me they have used the program and now it works well for them.  I am a good numbers guy but hope I have missed some important aspects that makes these programs at least a win/win for me and 21st. 

The CASH program gets you a home on your lot at no cost to you – how can you beat that? Everything you are worrying about is not an opportunity cost, but a function of them bringing in the home. Without the home, there’s no lot rent to lose or profit to lose. They have structured their program to give it the best chance of the customer not defaulting and I  believe their current stats are around 9 defaults in 1,000 transactions. It is in your interests to make sure the customer does not default, because you want the tenant to ultimately own their home outright and be a stakeholder in the park.All the money in this business is in the lots. We do anything to fill lots with the least amount out of pocket because all we want is the lot rent. We’re not hoping to profit one penny from any home in any park. We’re in the land business. We have done probably 100 of these CASH deals, and they work fine. That being said, you have to have a market in which the customers have the credit and cash to start off with. They work great in some areas and would never work in others. I would not bring in a CASH home, for example, to a park in which SF prices are $30,000 and apartment rents are $400 per month.

Business is only about making money. You should not overlook opportunities at your finger tips. Take every opportunity to make as much as you can when ever you can if the numbers work.Unlike Frank I view every opportunity from a profit point and that includes buying and selling homes. I  am not exclusively in the business of renting land I am in the business of making money. In my park when a lot goes vacant, fire, tree or other cause I view this as a positive. Why ? Because in my demographic I can buy, set and sell a home with a $15,000 -$20,000 profit. If I do not immediately have the cash to purchase I have two options, let the lot sit till I do at a small monthly cost or borrow the money and consider that cost in the sale price of the home. I have also pre sold homes before purchasing them.Profit margins may be more or less depending on your park and area and may even possibly be zero. However without knowing the numbers you may be missing a very good opportunity to diversify your business operations. But splitting a profit is better than no profit at all. Obviously this does not work if you have a large number of vacant lots or you are in a area with no profit margins on a home sale but if the money is there take advantage.    

greg,Tks for the input.  I certainly see Frank’s point of view and agree, however, our business model is more like yours.  We try to make money from any thing that revolves around mobile homes.  Buy,sell, rent houses, ,rent lots.  Mobile homes r-us.  We are a fully intergrated operation and try to make money from everything we do.  I guess I was just expecting a little  more gravy for us in the CASH program.  Frank makes a good point; a profit is a good one,  big or small,  and you do have another lot renter in the park. Major item is a cash on cash return on no capital invested is infinity!