I think the rent credit program form that many of us got from Frank and Dave uses 75% of home payment towards rent credits. I noticed that if you are not careful this can result in a very low equivalent interest rate. I ran 2 examples (both using 75% rent credit):Example 1: MH pmt $380/mo, home price $30k, months to get $30k in credits 106, equiv rate 7%Example 2: MH pmt $355/mo, home price $20k, months to get $20k credits 76, equiv rate 10%If you are borrowing at 8-10% from Legacy or friends and family to buy homes you at least want to match that rate when you sell/rent the homes (we like to have a few points spread and target for 12%).So the question is - when Sun built this program how did they get 75% and is there something magical about that ratio that makes it more or less SAFE Act compliant, and can we change it depending on the deal? I am thinking on my more expensive homes using more like 50% credit (in example 1 above a 50% credit equates to about a 12 % rate. If you play with a spread sheet (like I did) or your loan calculator you can start to see what is happening. Has anyone else looked at this?Bret
Hi Bret,I did a similar analysis when starting our rent credit program and we offer 50% credit for that exact reason and have been very successful at getting the homes filled quickly.
Pricing the home is a variable that you control.