First- This is just my way, not the only way, or the right way…
Most of the time the mobile homes are included in the contract and the overall sales price. So in fact, to a certain extent they determine the financing etc.
For instance- If I bought a 100 space park- and it had 80 homes come with it, and I paid $500,000 for the park… lets just be silly and value each of the homes at- $3,000.
Now if everything were on up front with the bank and the contract it would say-
MHP LLC is buying MHP
HOMES LLC is buying Homes
now that is 240,000 for the homes- and 260,000 for the park
But I am buying them together, as one package. If I split off the homes and the land in the contract, and at the closing, the bank is then really only loaning on the MHP- the 260,000 part.
If I put myself in the banks shoes- I would wonder why I was loaning on $500,000 when about 1/2 was going to be transferred to this other LLC…
I think this is VERY important if you’re using other peoples money for the homes llc, or a self directed IRA. The chain of money and the paydown of the debt will leave no doubt when you’re undergoing an IRS audit that you are not money laundering.
So- to keep the accounting clean- we show the homes as an asset- and then we sell them off for pre determined market value. I recommend you pay down your loan with the money that comes in from the sales. Banks require borrowers that subdivide or sell off parts of assets that are mortgaged to pay down a set portion of the debt with each sale. I think if the bank knew you were doing this- they would require in the note for this to happen.
for the record- the above mentioned deal is real- the numbers were adjusted up by 25% to keep the example clean- but I own this park.
Now for the song and dance- I am NOT a CPA, I am NOT an attorney…
Everyone needs to have their entire purchase contract and process reviewed by their own CPA and attorney and adjust the purchase and operations to match your own advice.
off topic - rant- sorry
Also- do NOT use a bookkeeper or someone that does tax prep, Find a good CPA, a really good CPA, a ROCKSTAR CPA- one that defends IRS audits, one that understands leasing and installment sale finance and repossession, and imputed interest. If you are selling on a lease option, and you do not understand installment sales and imputed interest- you need a CPA.