Most people don’t want to deal with getting payments… Most people are scared of it…. most people have no idea of how to do it…
So, let me, the mobile home guy, show you exactly how I do it, so you have no more excuses, and if you need to sell your mobile home (or single family residence) fast, then you just upped your game with this selling tool.
What is seller finance (or owner-carry)?
Seller finance is a type of transaction where YOU the owner of the asset (home, car, etc), take payments instead of a bulk all-cash purchase… in other words, YOU become the bank. I do this with mobile homes all the time. And you can do it with anything.
Everything is negotiable, so there are no set rules of how many payments you can take or the price… there is only one law that must be obeyed that I explain below.
Why Consider Owner-Carry?
Don’t get me wrong… getting cash up front is great.
I often will take the all-cash. But, if I do sell a home with payments, it feels nice to get that monthly income.
I get it, this is still not for everyone. But consider these few reasons why you should sell your mobile home with payments:
- You get more money in the long run… if you sell your house with payments and you’ve attached some interest rate to it, then you make more money after it’s all paid off.
- You can sell your home faster… If you have a mobile home, and you need to sell it quickly, it can take months to find an all-cash buyer or someone who will qualify with those strict mobile home lenders. By advertising that you’ll carry the loan for a low-down payment, you’ll open up the number of buyers interested.
- You can sell your mobile home as-is… By adding seller financed, the buyer pool will be people with very little money at hand, but… they might also be handy as well and they might prefer a “handy-man” special to lower the purchase price from retail.
- You can sell your mobile home at a higher price… If I buy a mobile home from a motivated seller, I always offer to raise the price if I can make payments instead. And the reason why you should as well is that you are providing an extra service for buyers.
So, bottom line, if you can be open to selling with payments, this will really open up the number of buyers that are interested in your mobile home in the Inland Empire. Because not everyone has tens of thousands of dollars sitting around to purchase a property.
So with three options available to buyers (cash purchase, owner carries, lender), you can sell easier and faster, and for a higher price because of the increased number of interested buyers (just make sure you market it well)…. plus you can get some monthly income while you’re at it.
First off, I have to disclose that if you do choose to sell your house with payments to a buyer who will be living in the house, there are some laws that pertain to this Called the SAFE act or the Dodd-Frank laws.
The common solution to appease this law is to have a loan originator (MLO) create the paperwork for you and qualify your buyer. Just walk into any lenders/brokerage office and ask if they’ll be a loan originator for a seller-financed transaction. Keep doing it until you find one that does.
The MLO will charge for his/her service. I pay mine $600, and he does a great job. But, like any home transaction, you can add the costs of this service to the loan. So, if it costs $600 to the MLO, increase the loan amount (the purchase price – the down payment) by $600.
NOTE: I’m not a lawyer so you should consult a real estate lawyer if you are to pursue this transaction.
Increase the value
Now that I cleared the air with that… I hope that I didn’t scare you because it’s really not a big deal to use a loan originator to perform this. And the little work that it creates (there really is no work because the loan originator checks and qualifies your buyer) is worth it because you can not only increase the purchase price by $5,000 or more but charge some interest.
So say the comparable values in the park for your home is $40,000 and that is for all cash-transactions… well now you can raise the price to $45,000 since the new buyer would only need to come in with a down payment. Plus with some interest added to it, you’ll be adding on top of that.
So at $45,000, you can accept a down payment of $3,000-$10,000 and $200-$600 a month until its paid off.
Get your money now… Some advice on the downpayment
Think of the down payment as their security to the property. The more money that they have vested in it the harder it is for a buyer to walk away.
But the catch is, it’s harder to find buyers that have that much money. So, sometimes I lower the downpayment amount to $3,000 if that’s all the buyer has.
Because it sucks having a house sit vacant.
But if you’re ok with waiting for your price, and you don’t mind waiting an extra month or two, then by all be firm on your downpayment amount.
Relax while you get some passive income every month
So slapping a monthly payment for your buyer can be as easy as just randomly choosing what you’re comfortable with or…
… doing it the way I do it:
I figure out a monthly payment that corresponds to the average rents in the area. A buyer’s monthly payment PLUS their space rent will equal out to the average comparable rents or slightly less.
Let’s say you’re selling a 2-bed mobile home. And the average 2-bed apartment rents go for $1,000 a month. And let’s say that the space rent of that park your mobile is in is $600 a month. Now just subtract the average rents with the space rent (1000-600=400).
I would set the monthly payments for the loan at $300-$400 a month for the new buyer.
This is only a rule of thumb, however… I don’t always use the exact amount of the equation. I’ll fudge the numbers a bit if I need to. Like, if the buyer doesn’t have the full down payment I’m asking for. Then I’ll raise the monthly payment.
Since you’re providing a service for the buyer, you can charge an interest rate. What you set your interest rate is completely up to you. It can be 0% it can 3% or way higher. Just make sure the buyer is comfortable with it.
Just know, the higher the interest rate the longer the longer it takes to pay off.
Actual Mobile home lenders will charge 10% or higher AND have points added to the loan (upfront costs). I will charge around the same (lower than some lenders), but I don’t include points or pre-payment penalties like some of them do.
To calculate it, just ask your loan originator to amortize the loan and he’ll/she’ll let you know the length of it right there and then. And, while you’re on the phone with him/her you both can figure out a monthly payment if you need to adjust it.
Everything is Negotiable.
The length, the payments, the down payment, and the interest rates are completely negotiable.
Heck, you can even make trades. For instances, a good friend of mine sold his piece of land for payments… and for the down payment… the buyer gave a truck.
So, that’s the beauty of it. You can really do anything. Just as long as both parties get what they want.
Don’t let the complexity scare you. It’s as simple as collecting rent every month. And at the same time, it raises the value of your home a bit and you can sell it much faster. Hopefully, this has opened your mind up to some creative ideas to sell your Riverside mobile home with payments.
If this sounds confusing, and you’d like to sell your home with payments, Give me a call for a free consultation, I might be able to even give you a fair offer with payments if you’d like!
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