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Financial Consultants Park City UT

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.

Denise Smith
Financial Planning Office LLC
(801) 466-4101
1308 South 1700 East, Suite 208
Salt Lake City, UT
Expertises
Ongoing Investment Management, Retirement Planning & Distribution Rules, Retirement Plan Investment Advice, Helping Clients Identify & Achieve Goals, Women's Financial Planning Issues, Tax Planning
Certifications
NAPFA Registered Financial Advisor, CFP®, CPA

John Bird
Albion Financial Group
(801) 487-3700
812 East 2100 South
Salt Lake City, UT
Expertises
Ongoing Investment Management, Charitable Giving - Trusts & Foundations, Financial Issues Between Generations, Advising Medical Professionals
Certifications
NAPFA Registered Financial Advisor, BA, CFA, CFP®, MBA

James Zeberlein
Z Financial Planning LLC
(800) 918-1790
2150 S. 1300 E., Suite 500
Salt Lake City, UT
Expertises
Retirement Planning & Distribution Rules, Hourly Financial Planning Services, Estate & Generational Planning Issues, Investment Advice without Ongoing Management, Insurance Related Issues, including Annuities, Ongoing Investment Management
Certifications
NAPFA Registered Financial Advisor, CFP®, MBA

Kent Wilson
Wilson Financial Advisors, Inc.
(801) 355-5210
50 South 600 East, Suite 250
Salt Lake City, UT
Expertises
Planning Issues for Business Owners, Advising Medical Professionals, High Net Worth Client Needs, Retirement Planning & Distribution Rules, Estate & Generational Planning Issues, Ongoing Investment Management
Certifications
NAPFA Registered Financial Advisor, BS, CFP®, CPA

Mr. Scott C. Pierce, CFP®
(214) 587-3196
3236 Meadows Dr
Park City, UT
Firm
Scott C. Pierce, MBA, CPA, CFP®
Areas of Specialization
Asset Allocation, Budget Development, Comprehensive Financial Planning, Debt Management, Education Planning, Insurance Planning, Investment Management

Data Provided by:
Paul Winter
Five Seasons Financial Planning
(801) 272-0902
4505 S. Wasatch Blvd., Ste. 290E
Salt Lake City, UT
Expertises
Ongoing Investment Management, Retirement Plan Investment Advice, Retirement Planning & Distribution Rules, Planning Concerns for Corporate Executives, College/Education Planning, Insurance Related Issues, including Annuities
Certifications
NAPFA Registered Financial Advisor, CFA, CFP®, EA, MBA

Debra Knotts
Albion Financial Group
(801) 487-3700
812 East 2100 South
Salt Lake City, UT
Expertises
Ongoing Investment Management, Planning Issues for Business Owners, Insurance Related Issues, including Annuities, Retirement Planning & Distribution Rules, Women's Financial Planning Issues
Certifications
NAPFA Registered Financial Advisor, CFP®, CLU

Thomas Fritz
Wilson Financial Advisors, Inc.
(801) 355-5210
50 South 600 East, Suite 250
Salt Lake City, UT
Expertises
Ongoing Investment Management, Middle Income Client Needs, Retirement Planning & Distribution Rules, Advising Employee Benefit Plan Participants, College/Education Planning, Socially Responsible Investments
Certifications
NAPFA Registered Financial Advisor, BS, CFP®

Mr. Jeffrey F. Bahls, CFP®
(435) 608-1407
7953 Cedar Way
Park City, UT
Firm
Green Tree Planning

Data Provided by:
Mr. Laurence D. Black, CFP®
(435) 649-4028
PO Box 980190
Park City, UT
Firm
Beckstead,Black & Associtates,

Data Provided by:
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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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