All Forum Posts by: Jim Johnson

Branden, If you do a lease option, and it is two separate deals your not extending credit.

First, they lease the home from you- then they purchase it for cash- your not extending payments. The cash value must be 'significant'. So it can not be for like $100. If you have a payoff or sale at the end that is not significant then, you have in fact extended credit. 

You need to hold the buyers hands through the process. So it works best if you sort of- quarterback the process. If the buyer is challenged by poor credit or marginal income, it will take longer to get the deal done. Triad is another nation wide financing option. 

I have enough cash to not need to use the CASH program or Triad, but I have lots and lots of investor friends that have used it. 

In short- the program is a partnership of sorts. The downside for me is they want you to share in the risk, and if the homes go bad during the process of the loans you hold some liability. You can get the home resold, but your still on the hook a bit. Just be sure you follow the rules if you use the 21st financing, or they might call the notes due and you will need to find other funding for the homes.

If you pull in the homes with your own cash, then resell them using the regular funding, 21st or Triad. They both will provide financing without the dealer or flooring programs. Then you make your own markups, they are not shared with the lender, and your not on the hook if the note goes bad.

Use 21st and their CASH program. Pull in new home, sell them then refi. Just a thought...

So- shared electric lines between homes and not updated since the 60s. 

Your problem is in that statement probably.

Electric lines can only carry so much 'load'. That load is determined in 'AMPS' and with distance, the 'Amps" load increases on the line. If you pull too many 'AMPS' you will do 1 of 2 things- trip a breaker or fuse, or start a fire.

You see this when people use an extension cord and run space heaters off the cord, the cord can get so hot it starts a fire. In the old days- mobile homes would use like 50 - 60 AMPS each. So maybe that MHP is set up to handle that amount. A window AC unit will draw 15 - 20 AMPS. A dryer uses about 30 amps. A stove uses 30 - 50 AMPS. Water heater uses 25 - 30 AMPS. In a home one uses a 'load calculator' to figure out how many AMSP of appliances you can have on the circuit. If you have too many AMPS- you will trip a circuit breaker, the main breaker or you could heat up the wires to the point the cause a fire. 

That is basic info- here is my take as a park owner.

I have had a park with this problem. There was a fire underground, and we had to shut off the power to fix the line. The city told us we had to fix all the power to turn the master meter back on- so we had to pull power to every home in the park and every home got a meter etc.

The cost was about $2,000 per lot. Power got turned on over time to each home, the first about 10 days after the power was shut off, and the last about at the 17 day mark.

OK- so maybe there are options. A power pole in most cases fully hooked up is about $2,000 per home-site. This assumes overhead power and the pole is close enough to a transformer to even get the power there. If there is no way to get power there overhead- the cost goes WAY up. In some cases that cost might go to 3 - 5 thousand per home. As a park owner, depending on space rents etc, that might shut a park down. 

When I had a master metered park we had strict restrictions on what kind of appliances you could have etc. As much of the appliances that could be gas were required to be gas. Even with that- if everyone got an AC unit it would have blown our power supply. 

The owner has good reasons to say no (probably). If the infrastructure can not handle the power it just can not. 

Ben, 

This is a quote from 

https://barneswalker.com/seller-financing-restrictions-under-the-dodd-frank-act/

A lease option contract where an owner rents out residential property to a tenant and gives the tenant an option to purchase the property after a specified period may also be subject to the new Dodd-Frank Act, if any of the rental payments are used as a credit toward the purchase price or create ownership equity in the property.

As you describe your 'rent to own' it would fall under this rule.

If you use part of the payment for the purchase of the home, or extend credit for such purpose you fall under Dodd Frank.

So- my best guess answer to your question is if you are doing rent to own, you need the licence. 

If you lease option where the payments or part of the payments go to the purchase of the house, you also need a licence.

If you lease option, where there is a fair market value payoff at the end of the term, and you are not going to carry paper you do not need a licence.

Also- if you are selling the home on a purchase contract (could be rent to own or a lease option depending on how it is written), you might (probably) fall under the rules of replevin (repossession) and not eviction. 

If you carry your own paper you must comply with the Dodd / Frank act. So, you need a mortgage originators licence etc. I used to carry paper 15 years ago, I do not carry paper any more. Another option is to lease option the homes. There are rules with this also- for instance the payoff must be 'market value' or something close to it. If you have a low payoff, it is a 'disguised loan' and the IRA and courts will treat it as such. If you lease option, you should sort of model it after the car market, as they have the lease / option thing nailed. Today, I will lease / option but I really like for the homeowner to just get financed through someplace like 21st.

Then- you get a dated deed from the seller and take the property 'subject too' the debt. You finance out of the old debt and give him the cash down once the financing goes through. You do not even need to inform the daughter. But- you must record your dated deed as soon as you get it. Once you own the property- evict her. If she has a problem with the old paperwork she had with her dad she can sue him... by that time its your property. The recorded deed should nullify the one that was not recorded. You might have it wrapped up before she knows whats up. Then- evict her. Send the residents the 'new ownership' info and make the payment come to you, and evict her.

That is probably if I really wanted the property how I would play it...

If you own parks, in the course of business you end up owning homes. So at any moment we own several and at times up too 10. They are abandoned, being rehabbed etc... 

Pull the records and see if the deeds are recorded. If they are- walk. If they are not- there is probably a good workaround. 

Do you know if they have been recorded? 

Is there debt on the park?