All Forum Posts by: Ben Reese

I attended the camp in Denver in July and thought it was excellent. You'll receive a thumb-drive with their analytical spreadsheets and all their contracts, offers etc. That alone was almost worth it. Frank and Dave also provide ongoing education, weekly conference calls and a lot of overall support. It's not cheap, but I'm confident I'm further up the learning curve and will likely avoid a future error that would have cost me way more than the tuition.

Here's a thought. You could offer to Lease the entire park with an option to purchase at some future date or from the estate if he does not recover. The lease rate would be such that you earned the same or better spread as you would if you we're to have financed it. Then, you could make improvements, clean up homes, bump rents etc as it is near certain that this unfortunate gentleman has neglected things for a while. For his part, he gets out of the hassle now, has an immediate return on his money, gets to sleep knowing the park is in good hands, and that if you can't buy it after he is gone his heirs will have it back in as good or better shape..

Hi Dawn,

It speaks well of you that you have that level of mutual trust with your sources! Good for you!

Ben

Here are some questions to consider.

City water?
City Sewer or septic or pond?
Age of homes?
What do these rent for?
What are comparable area lot rents (not lot/home package)
Who pays the water and sewer
What are the maintenance costs on what are likely old trailers
What's the insurance, city permits etc costs?
Are back taxes up to date?
Does he have title to the trailers..( you'll need that to sell them )

It will be tough to get a loan on the mobiles. The best you may do is get a bank to loan against the value of the lot rents. So if you buy this, consider taking title to the homes in a separate entity and have that entity pay rent to another entity that owns the lots. That way the bank may at least finance the entity that owns/leases the lots as it will not be able to lend against those old homes. . It's still going to be tough because this is such a small deal ...and it would be best if the owner would carry....

Dawn A. I would have to respectfully disagree with your comments about trust, past performance, borrower's credit scores, as the place to begin in HM/PM lending.

As an experienced HM lender told me when I started out a few years ago, "There's only two things you need to be a successful hard money lender, good loan-to-value and clear title."

With Private or HM lending it is not the credit quality of the borrower that protects the lender, indeed that's a bank's business model. Rather, it is the value of the secured asset that allows the lender to sleep at night. Consequently, any loan investment discussed in this forum ought to be one secured by a lien against real property.

Regardless of the borrower's performance, if a PM/HM lender loans at a conservative ratio of loan-to-value (LTV), ensures that the borrower has clean title to the asset, and liens the property with a properly recorded Deed of Trust or Mortgage, then -no matter what - it is almost certain the lender will ultimately be made whole. This is what asset based lending is all about and I never lay awake at night worrying if I'll ever be repaid. The only question sometimes is when. I know that sooner or later I'll be repaid because the property that secures my loan is substantially more valuable than the amount I loaned against it. And to further cover the bases I make sure the borrower provides me with an extended coverage title policy so that there will be no nasty surprises if I ever do have to foreclose. And I rarely ask for a credit report and prefer if the borrower has actually been rejected by a bank.

Now some think that asset based lending is a backdoor attempt to acquire assets on the cheap in the event of a borrower's default. And while I'm sure there are some unscrupulous lenders out there, the fact is this is very difficult for a lender to do. The only way a PM/HM lender can forcibly take title is through a foreclosure sale, and in such a forced sale the lender can only receive the amount owed. Any remainder goes to the borrower.

I have to agree with Ann Bellamy. "Private Money" and "Hard Money" are nebulous terms at best, but I have come to think that "Private" implies some form of prior relationship between lender & borrower whereas "Hard Money" means the loan is made, not against the borrower's credit, but against the "hard" asset.

Even though I am essentially a HM lender, I term myself as a private lender because: 1) not everyone is even familiar with the term "hard money", and 2) the loans I make are with either my own private funds or pooled with those of a small group of close friends. But like a HM lender I make loans without much consideration to the borrower's credit and instead consider the asset type/quality, title, and LTV. I will however research the general character of the borrower and strive to avoid any obvious trouble-makers. Once I find a loan that meets my criteria it will be made at 10-12% and 0-2 points.

While it is easy to assume that HM lenders are sharks, consider that many HM lenders are investor funded and as such must constantly recruit investors, pay those investors 8-12%, cover the cost of an initial Reg D filing, and meet the ongoing overhead of salaries, office expenses and so on. I doubt I could do all that for 18%!

As for finding a list of lender's, the problem small lender's like me have (and a likely reason there is no list of good small lenders )is that solicitation gets us in trouble. What with state regulations, the SAFE act and our inability to solicit investors, we have to keep a low profile, making this a word of mouth business.

So if I were looking for a Private Lender I would put the word out to local mortgage companies/brokers, title companies and attorneys.

It's only one of many strategies, but it's possible there may be an opportunity for cash flow right under your nose. Are there any abandoned MH's in your park? If so, talk to the park owner, get title, fix it up and rent it. The park owner will be thrilled to get the lot rent and you can make a few hundred per month off your initial sweat.

There are a couple of ways to check on this.. As David Niles mentioned, in many areas you can go to the County Treasurer's website and find the delinquent tax status. I will usually do this first. After that I will call the title company I intend to use for closing the transaction and ask them for a "commitment letter." which details the terms under which they will insure the title. The letter will include a list of "exceptions" which may show other mortgages, liens, back taxes, judgments, etc. that encumber the title. Many, if not most title companies will do this at no charge on the assumption they will be writing the title policy.

Now your purchase contract should have language requiring the seller to have all title problems cleared up before closing, but its amazing how many sellers either don't know they have faulty title, or don't wish for you to know. I find that getting ahead of this saves a lot of time and trouble.

John,

If you proceed get a title report so you can be sure all back taxes and code violations/fines/liens will be paid by the seller. Distressed property sellers sometimes neglect to tell you that a $10k property has $20k in delinquent taxes due.

Hi Perry,

Welcome to BP!

I'm a relatively seasoned investor and always looking at opportunities... and live in Lousiville.

If you're "handy, savvy and don't mind getting your hands dirty" you are about 90% on your way yo success.

Let's have that lunch and talk ideas. Oldest guy buys.

Ben