I am considering a MHP which has about 15% of the asking price as Mobile home inventory as a separate note. I am not interested in buying the notes due to multiple reasons which includes SAFE Act, Bank Financing etc., Is there a way to convince the seller to carry the notes? or is there a way to convince the banks to consider financing including mobile homes? All your suggestions are welcome. Thanks in advance.
The only bank that I know of that will include homes in the loan is Clayton Bank out of Knoxville, TN. It is often hard to get the sellers to agree to continue to carry the home notes post sale, as they knew what a disaster that is. But you can possibly have them carry the home paper 100% if it is part of the security on the park. That’s not that unusual a request. You might have the existing notes continue to pay the seller direct, so there’s no inclusion of you into the SAFE Act, and then you can convert those to rent/credit as they default.
Thanks Frankrolfe for your reply.But i should admit my ignorance that i did not understand the part " home paper if it is part of the security on the park". Could you please kindly elaborate a little bit on that? Thanks.
Sure. The seller may keep as collateral on the overall “deal” 1) the park and 2) the homes/notes. If you default on paying back the homes/notes, you would effectively default on the park as a whole – you cannot convey the homes without the seller’s consent. If a bank has the first lien on the park, then the seller’s note would be secured by a second lien on the park and a first lien on the homes. I’m not saying that you want that construction, but just trying to throw out all the options.
Just curious. Are these park-owned homes as rentals, or lease-sold? If rentals, how many, what is rent, and what is lot rent?
Thanks Frank for clearing up the understanding.Jimbo101- They were sold under rent-to-own program by the seller and is held as a separate note.