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Financial Consultants Leavenworth KS

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.

Mr. Joseph David Sebes, CFP®
(913) 651-4437
326 Santa Fe St
Leavenworth, KS
Firm
Ameriprise
Areas of Specialization
Comprehensive Financial Planning
Key Considerations
Average Net Worth: $250,001 - $500,000

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

Profession: Not Applicable

Data Provided by:
Mr. Rance J. Carlson, CFP®
(816) 220-5040
8640 N Green Hills Rd Ste 41
Kansas City, MO
Firm
Community America Credit Union
Areas of Specialization
Charitable Giving, Comprehensive Financial Planning, Estate Planning, Insurance Planning, Investment Management, Long-Term Care, Retirement Income Management
Key Considerations
Average Net Worth: Not Applicable

Average Income: Not Applicable



Data Provided by:
Mr. Joel K. Huet, CFP®
(816) 489-4444
6330 N. Lucerne
Kansas City, MO
Firm
Bank of Kansas City

Data Provided by:
Ms. Lucinda L. Richey, CFP®
(816) 587-7526
1805 NW Platte Road
Kansas City, MO
Firm
Prosperity Planning, Inc
Areas of Specialization
Asset Allocation, Budget Development, Charitable Giving, Comprehensive Financial Planning, Divorce Issues, Education Planning, Estate Planning
Key Considerations
Average Net Worth: $1,000,001 - $5,000,000

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

Profession: Not Applicable

Data Provided by:
Mr. John T. Christy, CFP®
(816) 436-9939
5440 N Oak Trfy Ste 250
Kansas City, MO
Firm
Premier Financial Partners
Areas of Specialization
Asset Allocation, Budget Development, Business Succession Planning, Charitable Giving, Comprehensive Financial Planning, Debt Management, Divorce Issues
Key Considerations
Average Net Worth: $500,001 - $1,000,000

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

Profession: Service Professionals

Data Provided by:
Mr. Todd D. Barr, CFP®
(816) 382-3722
9800 NW Polo Dr Ste 150
Kansas City, MO
Firm
Meridian Wealth Management, Inc.
Areas of Specialization
Asset Allocation, Business Succession Planning, Charitable Giving, Comprehensive Financial Planning, Divorce Issues, Education Planning, Elder Care
Key Considerations
Average Net Worth: $250,001 - $500,000

Average Income: $50,001 - $100,000

Profession: Service Professionals

Data Provided by:
Ms. Robin N. Neal, CFP®
(913) 441-6653
212 E 2nd St
Bonner Springs, KS
Firm
Cox & Neal

Data Provided by:
Mr. James C. Mcmurtry, CFP®
(816) 659-9534
6300 N Revere Dr Ste 250
Kansas City, MO
Firm
Wells Fargo Advisors Financial Network

Data Provided by:
Mr. Ryan Noble, CFP®
(816) 587-7526
1805 NW Platte Rd Ste 100
Kansas City, MO
Firm
Prosperity Planning
Areas of Specialization
Asset Allocation, Business Succession Planning, Charitable Giving, Comprehensive Financial Planning, Divorce Issues, Education Planning, Employee and Employer Plan Benefits
Key Considerations
Average Net Worth: $1,000,001 - $5,000,000

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

Profession: Not Applicable

Data Provided by:
Mr. H. Arvid Hansen, CFP®
(816) 436-9939
5440 N. Oak Trafficway
Kansas City, MO
Firm
Premier Financial Partners
Areas of Specialization
Business Succession Planning, Charitable Giving, Comprehensive Financial Planning, Divorce Issues, Elder Care, Estate Planning, Investment Management

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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