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Financial Consultants Petal MS

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. Andy Leslie, CFP®
(601) 583-5257
PO Box 1071
Hattiesburg, MS
Firm
Trustmark Wealth Management

Data Provided by:
Mr. Howell G. Taylor, CFP®
(601) 261-5990
6555 U. S. Highway 98 West
Hattiesburg, MS
Firm
Wells Fargo Advisors

Data Provided by:
Mr. Brady C Raanes, CFP®
(601) 450-6650
109 Fairfield Dr
Hattiesburg, MS
Firm
Wells Fargo Advisors Financial Network
Areas of Specialization
Asset Allocation, Charitable Giving, Comprehensive Financial Planning, Employee and Employer Plan Benefits, Estate Planning, Investment Management, Retirement Income Management
Key Considerations
Average Net Worth: $500,001 - $1,000,000

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



Data Provided by:
Mr. Bradley T Bondurant, CFP®
(601) 579-5816
6042 Hwy 98 West
Hattiesburg, MS
Firm
Hancock Bank

Data Provided by:
Wells Fargo - Hardy Street
(601) 264-3275
3707 Hardy St
Hattiesburg, MS
Type
Branch
Office Hours
Mon-Thu 09:00 AM-05:00 PM
Fri 09:00 AM-05:30 PM
Sat-Sun Closed

Mr. Christopher D. Inman, CFP®
(601) 271-7673
6606 U S Highway 98 Ste 1
Hattiesburg, MS
Firm
Morgan Stanley Smith Barney

Data Provided by:
Mr. Duane L. Raanes, CFP®
(601) 450-6650
109 Fairfield Dr
Hattiesburg, MS
Firm
Raanes Capital Advisors, LLC
Areas of Specialization
Asset Allocation, Employee and Employer Plan Benefits, Estate Planning, Investment Management, Investment Planning, Long-Term Care, Retirement Income Management
Key Considerations
Average Net Worth: $500,001 - $1,000,000

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

Profession: Not Applicable

Data Provided by:
Mr. John H. Knight, CFP®
(601) 271-6400
32 Millbranch Rd Ste 10
Hattiesburg, MS
Firm
Morgan Keegan
Areas of Specialization
Comprehensive Financial Planning, Divorce Issues, Employee and Employer Plan Benefits, Estate Planning, Investment Management, Investment Planning, Long-Term Care

Data Provided by:
Mr. Sean Michael Priebe, CFP®
(601) 261-6845
PO Box 15032
Hattiesburg, MS
Firm
Citizens National Bank/Raymond James Financial Services
Areas of Specialization
Comprehensive Financial Planning, Retirement Income Management, Retirement Planning, Wealth Management
Key Considerations
Average Net Worth: $500,001 - $1,000,000

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



Data Provided by:
Wells Fargo - Turtle Creek
(601) 705-2200
6093 Us Hwy 98
Hattiesburg, MS
Type
Branch
Office Hours
Mon-Thu 09:00 AM-05:00 PM
Fri 09:00 AM-05:30 PM
Sat-Sun Closed

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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