I am considering starting a program to lend on mobile homes. Here are some of the terms I was considering.
1.Interest rate of 18%.
2.Advance rate of 75%.
3.Loan term up to 5 years.
4.Borrower must own park and the mobile must be sited in that park.
5.Borrower would personally guarantee.
Are these terms doable? Please critique.
Thanks for your help.
This could be possible to work out with trusted park owner!
Rick,
I’ve thought about this for a while on again off again for a long time. First off 18% to most park owners isn’t going to work, you will have a few that are having problems with their park but most of the people you want to deal with won’t blink at telling you where you can take your 18% rate.
Why? Most park owners can get money at around prime even though they have to jump the banks hoops to make it happen. Both 21st mortgage and Clayton bank now offer programs that would directly compete with you under the setup you are looking at.
My idea and I believe it would work for most any LD’er is to locate the parks that need homes and finance the home to them while having them paying to move the home. By giving them easy terms and good rates I believe that a good portion of park owners would jump to get what they consider cheap money to infill their park…
i.e. You buy a used home for 3k and market it to a park owner for 5k at 7.5% 0 down and they pay the move cost. Say you set the terms for 36 months the park owners payment is going to run $155ish leaving them a profit on the home and the lot rent and they can brag about the 7.5% money they’ve got. Your yield is a little over 46% and the loan is secured by the home and if there is a default you can lien the park as well to recover the money.
Over all I consider park owners to be one of the best potential buyers I just haven’t taken the time / effort to make it happen.
Best wishes,
Ryan Needler
Ryan. These terms and rates would be very comfortable to most park owners and a great return for the investor…kinda win/win for all.
Always thinking, aren’t you?? LOL
Greg