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Financial Consultants Covington GA

The Seller Finance trap begins with a seller who is having trouble finding a buyer. Maybe the park’s vacancy is too high, maybe the location is too rural or in obvious decline. Whatever the cause, the seller can either sit on the park for an eternity, or find a creative way to attract a buyer. And what can be more attractive to a buyer than an easy to qualify, below market interest rate loan.

Norris Edmonson
Beacon Financial Advisers, Inc.
(678) 750-1700
1429 Business Center Drive
Conyers, GA
Expertises
Ongoing Investment Management, Tax Planning, Retirement Plan Investment Advice, Retirement Planning & Distribution Rules, Estate & Generational Planning Issues, Planning Issues for Business Owners
Certifications
NAPFA Registered Financial Advisor, BS, CPA/PFS

J. Brian Preston
Preston & Cleveland Wealth Management, LLC
(770) 898-4235
1611 S. Zack Hinton Parkway
McDonough, GA
Expertises
Ongoing Investment Management, Planning Issues for Business Owners, Estate & Generational Planning Issues, Advising Medical Professionals, Tax Planning
Certifications
NAPFA Registered Financial Advisor, CFP®, CPA/PFS

Ms. Lynn Teague, CFP®
(770) 633-6449
2890 Highway 212 SW Ste A-149
Conyers, GA
Firm
Lynn Teague, PC

Data Provided by:
Mr. Andrew M. Brown, CFP®
(770) 918-0702
931 Commercial St NE
Conyers, GA
Firm
Brown Wealth Management LLC
Areas of Specialization
Comprehensive Financial Planning
Key Considerations
Profession: Self-Employed Business Owners

Data Provided by:
Mr. Brian S Staples, CFP®
(770) 305-7900
255 Racetrack Rd
McDonough, GA
Firm
Staples Financial Management I
Areas of Specialization
Investment Planning, Retirement Income Management, Retirement Planning

Data Provided by:
Robert Hockett
Cambridge Southern Financial Advisors
(770) 506-7377
505 Corporate Center Drive, Suite 105
Stockbridge, GA
Expertises
High Net Worth Client Needs, Advising Medical Professionals, Planning Issues for Business Owners, Planning Concerns for Corporate Executives, Retirement Planning & Distribution Rules, Ongoing Investment Management
Certifications
NAPFA Registered Financial Advisor, BA, CFP®

Mr. James R. Rogers, CFP®
(770) 788-7872
13161 Brown Bridge Rd
Covington, GA
Firm
Edward Jones Investments
Areas of Specialization
Investment Management
Key Considerations
Average Net Worth: $250,001 - $500,000

Average Income: $100,001 - $250,000

Profession: Not Applicable

Data Provided by:
Ms. Nichole Clare Kaiser, CFP®
(678) 783-7899
931 Commercial St NE
Conyers, GA
Firm
State Farm

Data Provided by:
Mr. Bo B. Hanson, CFP®
(770) 898-4235
1250 Keys Ferry Rd
McDonough, GA
Firm
Preston & Cleveland Wealth Management, LLC
Areas of Specialization
Asset Allocation, Comprehensive Financial Planning, Education Planning, Employee and Employer Plan Benefits, Estate Planning, General Financial Planning, Insurance Planning
Key Considerations
Average Net Worth: $500,001 - $1,000,000

Average Income: $100,001 - $250,000



Data Provided by:
Mr. Louis B. Hardcastle, CFP®
(770) 484-1204
3038 Evans Mill Rd
Lithonia, GA
Firm
Luther Rice University

Data Provided by:
Data Provided by:

Beware of the Seller Finance Trap

BEWARE OF THE SELLER FINANCE TRAP
Sat 08/15/09 08:48:07 pm
by Frank Rolfe

There are few things more attractive about the mobile home park business than seller financing. Non-recourse seller financing allows the buyer to escape the hassle and scrutiny of bank lending, while at the same time offering some degree of insurance against fraud (you have not yet paid the seller in full), the ability to give the park back and walk clean in the event of catastrophe, and often includes a below-market interest rate and longer loan term.  

That being said, there is a trap often used by sellers that is baited with seller financing, and it is important to always be aware of, and stay clear of, this danger. 

The trap begins with a seller who is having trouble finding a buyer. Maybe the park’s vacancy is too high, maybe the location is too rural or in obvious decline. Whatever the cause, the seller can either sit on the park for an eternity, or find a creative way to attract a buyer. And what can be more attractive to a buyer than an easy to qualify, below market interest rate loan. 

Of course, there’s nothing wrong with a below-interest rate seller note. But not when it is used as a trap. And many times, that’s exactly what is being set. 

You see, the seller knows that the park will never hold up to the scrutiny of a bank – the appraisal, the independent review of the numbers, even the negative logic of the loan officer. To keep you from finding out that the park is overpriced, Do the Search or in a bad neighborhood, or basically completely unable to be financed, the seller offers to carry the loan and cuts the bank out of the loop day one. That’s the first leg of the trap.

The second part of the trap is to bait the deal with a super low interest rate to make the park look like it is a profitable investment, even though it could never carry a regular bank debt load of the same size. If a park is a 4% cap, then what better way to disguise the poor performance than with a 2% interest rate on the mortgage? The seller is effectively cooking the books with the buyer’s blessing. When you accept a cash-on-cash return that is spiked by ridiculously low interest rates, then you may be getting into trouble.

The final part of the seller trap is to offer only a short loan term, maybe two to five years, and the below-market interest rate for only the first year or so. What this does is to put the buyer in a negative cash- flow situation almost immediately, and force the round of bank loan requests that normally end in nothing but rejection. Faced with the loan coming due, and no bank loan prospects, the buyer often gives the park back to the seller, less his 20% down payment. There are sellers out there who have sold the same park two or three times under this framework, garnering 60% of their purchase price in down payments, and still owning the park. 

So how do you avoid ...

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