What is reasonable to offer as collateral in a seller finance deal?
Assume the park is worth $2M. The buyer will get $750,000 from the bank and the seller agrees to carry the other $750,000 note. (Using a 75% LTV for simplicity) The bank gets 1st lien, the seller gets second lien.
In the event of a foreclosure the bank sells the property at market value and distributes the proceeds accordingly. How much above and beyond the second lien should a buyer offer the seller for security? Assume buyer has a great track record in the MHP business.
Thanks in advance.