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Financial Consultants Williston ND

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. Douglas W. Crosby, CFP®
(701) 774-0653
PO Box 2538
Williston, ND
Firm
Investment & Retirement Advisors, Inc.
Areas of Specialization
Estate Planning, General Financial Planning, Insurance Planning, Investment Planning

Data Provided by:
US Bank - Williston Office
(701) 572-3744
202 Main St
Williston, ND
Drive Up Hours
Mon 08:30 am to 05:00 pm
Tue 08:30 am to 05:00 pm
Wed 08:30 am to 05:00 pm
Thur 08:30 am to 05:00 pm
Fri 08:30 am to 05:00 pm
Sat 09:30 am to 11:30 am

Mr. Doyle A. Ranstrom, CFP®
(701) 293-5789
808 3rd Ave S
Fargo, ND
Firm
Ranstrom Financial Planning
Areas of Specialization
General Financial Planning
Key Considerations
Average Net Worth: $250,001 - $500,000

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

Profession: Not Applicable

Data Provided by:
Mr. Perry D. Bohl, CFP®
(701) 255-6832
PO Box 1618
Bismarck, ND
Firm
Investment Centers of America Inc

Data Provided by:
Mr. Robert C. Johnson, CFP®
(701) 223-9084
2331 Tyler Pkwy Ste 6
Bismarck, ND
Firm
Securities America, Inc.
Areas of Specialization
Asset Allocation, Comprehensive Financial Planning, Employee and Employer Plan Benefits, Insurance Planning, Investment Management, Retirement Income Management

Data Provided by:
Ms. Beth M. Skedsvold, CFP®
(701) 577-4697
1135 2nd Ave W
Williston, ND
Firm
Ameriprise Financial
Areas of Specialization
Comprehensive Financial Planning
Key Considerations
Average Net Worth: $500,001 - $1,000,000

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

Profession: Self-Employed Business Owners

Data Provided by:
Mr. John A Halstenson, CFP®
(701) 746-8319
2300 Library Circle
Grand Forks, ND
Firm
Thrivent Financial for Lutherans
Areas of Specialization
General Financial Planning, Insurance Planning, Long-Term Care, Retirement Income Management, Retirement Planning
Key Considerations
Average Net Worth: Not Applicable

Average Income: Not Applicable

Profession: Not Applicable

Data Provided by:
Mr. Roger B. Johnson, CFP®
(218) 643-6995
1128 Westrac Dr S
Fargo, ND
Firm
Raymond James Financial Services, Inc.
Areas of Specialization
Asset Allocation, Business Succession Planning, Comprehensive Financial Planning, Education Planning, Elder Care, Estate Planning, General Financial Planning
Key Considerations
Average Net Worth: Not Applicable

Average Income: Not Applicable

Profession: Not Applicable

Data Provided by:
Mrs. Amber D Meyer, CFP®
(701) 352-1217
1245 Lawler Ave
Grafton, ND
Firm
Ameriprise Financial
Areas of Specialization
Asset Allocation, Business Succession Planning, Charitable Giving, Estate Planning, General Financial Planning, Insurance Planning, Investment Management
Key Considerations
Average Net Worth: $1,000,001 - $5,000,000

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

Profession: Self-Employed Business Owners

Data Provided by:
Mr. James M. Lochow, CFP®
(701) 845-1660
PO Box 725
Valley City, ND
Firm
James M Lochow CPA PC
Areas of Specialization
Accounting, Comprehensive Financial Planning, Employee and Employer Plan Benefits, Insurance Planning, Retirement Planning, Small Business Planning, Tax Planning

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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