All Forum Posts by: Geoffrey Lessel

@Jamie Bateman Hearing that makes me think there is a definite downside to CFDs that are you trying to avoid. Is it the aspect of still being responsible for the property itself and the things mentioned in your article?

I did find this article by @Jamie Bateman. I'm not sure if this is the one you are referencing, but it appears to be just what I'm looking for. https://labradorlending.com/bl...

I've been out of the learning game for enough years that I'm fuzzy on this first point again. While I do know the legal difference, I don't know the pros and cons of a CFD over a mortgage. Would you mind elaborating on that for me or point me to a good resource that does? I'm looking to buy another note after being out for about a decade and I'm seeing a lot of CFDs available.

Ok, thanks for the help guys. For the time being, I'm going to pursue other options.

 Are you guys suggesting that I am being predatory here?

Dion -- thanks for the response. A couple clarifications:

As I mentioned in my above post, the verbal offer contained a 3-year balloon but I am not considering the balloon in the numbers here. If that deal goes through, then I might just hold the note for 3 years. I am more interested in the concept of if a note buyer would even consider buying a note like this as if it was in 1st position if, in the sales agreement, it is stated that the proceeds of the sale of the note would go first to paying off entirely the original 1st lien.

The potential buyer that made the verbal offer is not a desperate borrower in my initial conversations with him. He is a local investor who owns multiple rentals in the area and would like to purchase the property to hold as a rental. I haven't dug deep into his borrowing history nor will I until I decide this is the route I'd like to take (which I'm still not sure of).

As for the "obvious question": "Why are you not selling the property in the open market for $73k or even $65k"? That is a very relevant question. There are a few different reasons:

1) I've attempted to sell the property straight up and while there has been some interest from buyers in purchasing the property, all of them have so far been unable to obtain a loan.

2) I imagine that offering owner financing would open the doors to many more potential buyers.

3) I'd like to get some experience with notes. I can be a little patient in terms of getting my money out of this property and I thought that this could potentially help in getting my foot in the door of the note world. I'm willing to take a larger discount for the experience and knowledge.

As for the property value, it's Zestimate is $90k+. I can hear your eyes rolling. =)

The ONLY reason I point out the Zestimate is to show how crazy this particular area is. I don't believe the property is worth $90k but I do believe it is worth every bit of $70k retail. This particular area is good or bad block-by-block. This one happens to be an excellent block. A smaller house (though rehabbed) sold for $110k+ just 6 houses north of this one. Mine does not need anything other than cosmetic updates and is larger. I believe the massive value swings block by block have also hindered my attempts at selling it straight up.

Regarding the balance of the 1st lien, I'd rather not openly discuss that until this property is sold. I can say that I'd like to receive $50k in order to pay off the loan and have some capital for another project. I am anticipating getting at least $10k more out of it after all is said and done.

Thanks for the replies guys. To explain further, I would pay the first mortgage monthly payments and my buyer would pay me as a second. If (and that's a big if) I can sell the note, I would use the sale to pay off the first.

I haven't done this before but here's some quick calculations I've come up with. Let me know if I'm out of line with these numbers:

Purchase price of $73,000; $8,000 down.

$65,000 financed at 10% over 240 months. I've had one verbal offer like this with a balloon payment after 3 years (though a balloon isn't considered in these numbers).

If I can season it for a year, 228 months remain. I could sell 200 months of payments for ~$51k which would offer the note buyer a return of 13% (is that a marketable rate?). That would pay off the first and then some.

Is that doable? Is it possible to do this with a land contract so as to avoid the first's due on sale clause?

As for the usury limit in AR, it was recently (within the past 2 years) raised to 17% so I'm good there (constitutional amendment 89 if interested). It was ridiculous how low it was for years.

I am considering offering some owner financing on a property I am looking to sell. I currently have a first mortgage on the property so any note I create would be in 2nd position. I have two questions regarding this:

1) Can I even do this? Is there anything regarding the 1st note (which is held by a big-bank lender) that would prevent me from doing this?

2) Can I sell all or partial payments on the 2nd note with the agreement that all proceeds would first pay off the 1st lien so that the note moves into 1st position.

When trying to market this note to other potential buyers, can I specify in an agreement or something that within 14 days (or whatever short period it takes to send full payoff to the 1st lender) the 1st lien will be gone?

Any help here would be appreciated.

Such a good thread. Thanks, Danny. Any updates over the past week?

I have found a deal here in Central Arkansas on a mobile home park that I would love to get comments and/or suggestions on. I have a private money lender who is interested in the deal with me but I've never bought a MH park before. Here are some details:

* Inside city limits (you can't create any more parks in city limits by law)
* 29 pads (no park-owned homes)
* Pads rent for $150/month or $190/month (depending on whether the homeowner has dog(s)
* Currently 11 pads are rented (8 w/o dogs, 3 with)
* Selling for $150k
* Owner owes $100k and is willing to finance $100k with down payment of $50k. I don't know any other terms than that at the moment.

What questions should I be asking the seller? What should I be looking for? Is this a deal that seems good? It certainly looks fantastic to me by numbers, but again, I'm new to MH investing.

Any comments or suggestions would be much appreciated.
Thanks!
-geoffrey