Financing with Equity not cash

New girl on the street and listened to all the MHU CDs…from Iowa and Missouri, living in Texas right now. So, here’s the scoop, I have a 31 acre grass farm in Missouri that I sold on a 5 year note with balloon (4 years left). They put 15,000 down (already spent) and have added a double wide mobile home, built a new barn, put in sewer, finished the cabin and concrete in shop. Nice place, thought I would sell the contract but first bid was 85,000 to 87,000. They have a balance of 110,000 left and it’s all equity. I’m not going to take a $25,000 loss to buy a mobile home park (or should I) but wondered if I could borrow the down payment against this note. The farm is actually close to the location of the park I may be interested in. I’m not real savvy on creative financing. Have good credit but wondered what my options would be …still learning the ins and outs. Thank you in advance.

First question, Is the note assignable?

I’m going to show my ignorance here…what do you mean by assignable? It’s a contract for deed with a Quit Claim attached.

usually a contract of that sort has an assignability clause that allows the holder to assign the note as they see fit without consulting the land holder. Just like the note could have an assumption clause that allows the land holder to sell the property to someone else as long as they assume the mortgage. So a note with an assignability clause would allow you to find a buyer of the note or use it as collateral with a seller or bank without needing the ok from the mortgagee, something that they could demand compensation for.

Here is the clause…and the buyers are friends of mine and we’ve discussed possible selling of the contract.

Assignment and Transfers:

Buyer shall not assign, mortgage, transfer, or contract to sell the above described property without the prior written consent of Sellers. In the event of assignment, Buyers shall remain liable for all of the terms and conditions of this contract.

Sellers shall not, without the written consent of Buyers, encumber or convey said property or place additional liens against said property, or do anything to jeopardize title to the property. Sellers do have the right to renew or refinance any existing loan or lien described above so long as the action does not increase the amount of lien against the property that exists at the time of renewal or refinancing.

As I’m understanding this, if I have written consent I could borrow against the note that is not over the amount they owe since I don’t have a loan on it and it’s paid for. ??? Or would that be considered a lien? I could be all wet too…

You might be able to use it for collateral, do check with a lawyer. I was looking for the statement saying the seller may assign the note.

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Thank you for your help Michael G, nothing as blunt as you are stating in the contract. I will do some checking though, you have me going in another direction at least…


If what you want is to cash out of this transaction, lets see about getting the buyers to refinance the contract with a bank. That’s usually the fastest route to cash.

You could offer a (small discount / pay their closing costs) for paying off the contract early.

Keep up posted,



They have a loan on a hobby farm in Minnesota, that is why I did a short term so it would give them a chance to get that place sold in Minnesota, then they sold it on a 4 year contract so they other guy would be paying his off well before my balloon was due. So, they are banked out for now.

Suggestion number 2:

Use the entire note/contract as your down payment on a MHP.
You won’t see a discount and the only thing you’ll give up is the income from the note.

That’s $110k down payment. Not exactly chicken feed. But probably not enough to buy a million-dollar park. That’s OK.

The seller sees you have some ‘skin-in-the-game’ because of the legitimacy of the contract.

If you find a good park, the income from that acquisition should easily out distance the income on the note/contract.

Keep up posted,

Mike Weiss

Thank you Mike, I had thought of this concept but didn’t know if investors or banks for that matter would do this kind of down payment…I wouldn’t have immediate cash for updates or repairs except for rents so would have to save some cash fast for the unexpected…don’t think a seller would want this (seller contract) but it is $659.00 per month income on top of the payments I would be making to them for the park…it’s so hard to look at properties when you’re working for a living…especially when they are not close. Thanks again.