I recenly found a guy that is interested in loaning me money to purchase trailers for my park.I told him I was willing to offer 10 %return on his money.I would take care of finding tenants,repairs and rent collections.I also said he can have his name on the titles for collateral.At this time we are both getting are ducks in order.My question is how long should the terms be?I would like them to be as short as possible so the tenant can take ownership quickly and I get out from underneath them.Currenly I personaly have several rented that are 15-18000 with payoffs in 3 years.I would like to stick with this model.Souldnt the invester be happy with getting 10%along with a quick pay back?
Yes. Don’t get yourself locked into paying any interest rate longer than your asset will last. If you are fortunate enough to have the homes profitably bought away from you in 3 years, then you must have the right to pay off your investor and stop your obligation to him. Of course there is nothing wrong with doing it all over again on a new set of homes (perhaps in a new park at that point!). But don’t let an investor insist you pay for longer than you are likely to have an asset backing it up.My 2 cents worth,-jl-
I agree. I guess the real concern is that I have someone interested in investing I dont want to lose them because there isnt enuff money to be made in short term lending.But as I said before 10% is 10% and as you said I can continue to reinvest with him.