Used home sales: Rent Credit vs. CASH program

If you are trying to unload a bunch of used, occupied POH what is the advantage of rent credit instead of the CASH program?

As I understand it, CASH will lend with good terms and has 80% credit approval. So park owners will get a lump sum once they sell a POH (minus the $1500 fee to 21st Century Mortgage).

This seems way easier than implementing and tracking a rent credit program. Am I missing something?

It is my experience that with the rent credit program, the capital you have tied up in the POHs slowly erodes away until you sign the title over to the residents. Then you are left with nothing but vague memories of the far gone days when your net worth statement had a big, six figure, asset line item called Park Owned Homes.

With the CASH program you get the capital out of the home as soon as the deal closes. Do it enough times and maybe it’s time to go shopping for your dream home.

I propose a third way; having a third party professional prepare the loan docs and doing an owner carry-back. Then selling the notes in the secondary market.

Your current residents may not qualify?

Or they may not have 10% to put down. This is where rent credit might be applicable – you kick back the credit as cash to the closing to make the down payment. But I’m not entirely sure that’s legal or that 21st (or whatever lender) will consider that an sufficient source of funds. The regulations on this are insanely complex and we have so far stuck to true sales with 10% (cash) down.

Thanks all. I was just in the bootcamp this weekend (great refresher) and yes, the CASH program is definitely a better option than rent credit for a turnaound park because you get the capital back out much quicker…

@Randy_CA, Randy, could you please explain what this means…

“…doing an owner carry-back. Then selling the notes in the secondary market.”

What is an owner carry-back? And how would you sell the note in the secondary market? Where is the secondary market?