I’m negotiating terms for a park that I’m interested in. Price is $400,000 with $100,000 down payment. Balance at 6% interest But seller is giving me the option to amortize it over either 10 years 15 years or 20 years.
At 10 years, my cash flow would be close to zero, but I’ll be accumulating significant capital appreciation due to all the debt pay down!
Is there a preferred term for financing when the seller let’s you decide?
What would you do?
Go 20 years amortization – you need the breathing room. You will make more money taking the extra cash flow and plowing that back into filling vacant lots and improving the parks’ overall condition so you can maximize lot rents and still offer a great value.
@AG another thing to consider is inflation. A longer fixed loan is ideal because that monthly payment will be “less” over time, even though it’s the same amount. For instance, if you’re paying 2k a month over 30 years, 2k won’t have nearly as much purchase power in 15 years and even less in year 30. Meanwhile you’re continually increasing rents/bringing expenses down. Even though you’ll pay more overall in interest payments with a 20 year vs a 10 year, you have to consider other factors such as the time value of money, inflation, opportunity cost, etc.
Take the longest amortization you can get… the payment amount is just the minimum payment required… you can always pay extra to reduce the interest expense but having the lower payment can help if you find there are unexpected expenses to get you up and running.
My company provides the most simple,rocket fast loan process.Whether for construction, business, bridging or commercial purposes, we take the time to promptly understand your unique finance needs and demands in order to deliver a tailored loan structure that is fit for your purpose.
The faster and easier way to fund your business. If you’ve any loan request that doesn’t fit with conventional loan parameter, kindly
contact me.
Do you have any scenario you would love us to discuss ?
Our referral relationship means a lot and if you bring a client to us, We pay you a referral fee.
Contact us today on how to get started
Email:Brandonwilliam2923@gmail.com
Scottbunny1414@gmail.com
415-598-7677
@AG, as per your post:
As a “Super Conservative Mobile Home Park Owner” I would:
As @frankrolfe “The Expert” stated:
We wish you the very best!
My company provides the most simple,rocket fast loan process.Whether for construction, business, bridging or commercial purposes, we take the time to promptly understand your unique finance needs and demands in order to deliver a tailored loan structure that is fit for your purpose.
The faster and easier way to fund your business. If you’ve any loan request that doesn’t fit with conventional loan parameter, kindly
contact me.
Do you have any scenario you would love us to discuss ?
Our referral relationship means a lot and if you bring a client to us, We pay you a referral fee.
Contact us today on how to get started
Email:Brandonwilliam2923@gmail.com
Scottbunny1414@gmail.com
415-598-7677
Another benefit of choosing a longer term amortization - in time the sellers’ needs will change and they’ll need to cash out sooner than 20 years. Then its time for part 2 of the deal, discounting of the balance of the note.
-Mike