A little intro. As a lurker we have learned from so many of you. Thank you for being a true blessing. I work with my son, together we have done more than 30 lonnie deals, 7 homes (LH and stick built). We have sold 3 LH on notes. We have Tony and Scotts book and have worn the covers off all of Lonnie’s books.
We would like to do more LH deals. We have financing in place for as many as we can do, at 20 yr am. We are limited to 55,000 working capital. The plan as we see it is to buy for cash, make the repairs and put financing in place and move on to the next one. The problem we are having is to get a decent spread on cash flow for each home. (we are looking for 200 amonth)
Our financing is 8.25, 20 yr,3yr fixed. We have looked for 30 yr money to help the spread, but have been told no thanks or we might do one. We would either rent or sell with owner financing. If we sell we would do it on a 2yr ballon. hoping to cash out at the end of the ballon. We have concerns of being on a note that could move up 1.5 % at the 3yr mark.
By working with our limited working capital we would be slowed to a snails pace doing one at a time, putting financing in place, and moving on with a rental or selling, might only be able to do only 4 or 5 homes a year.What are we not thinking of? Should we first flip some homes to build up more working capital that we could move faster? We want to build long term income and working capital in order that we might continue growth. We would appreciate your input as we put together our next goals as it is eaiser to change before making mistakes. Thanks.