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Do You Buy Mobile Home Notes (Paper)? We Provided Owner Financing in Arizona

Traditional (and even private) financing is almost impossible to get for mobile homes… especially older ones.  So, it’s very common for people to offer terms (seller financing) when selling.  Here’s a recent email:

“Dear Dawn,

 I have a financing question for you.  We have an older mobile home (1969) that we just sold, owner financing with a balloon in 10 years.  The buyer asked me what her options were in 10 years if she doesn’t have enough money to pay off the balloon.  Other than not buying it, I told her she would need to find private money.. or can the note be sold?  Does anyone buy notes on older mobile homes?  The balloon amount is $47,000.  Any information would be appreciated.”Sue

Hi Sue,

There are few buyers for mobile home paper, but there are some here and there.  Balloon payments these days almost guarantee that the note holder will either be foreclosing or restructuring and extending the loan.

A fully amortizing note over the shortest time possible is usually the best option, but let me ask you a couple quick questions…

If you end up finding someone who wants to buy the note, they will ask you to take a pretty steep discount in general.  So, if taking .50 to .70 cents on the dollar doesn’t sit well with you, then just hold on and know that you’ll have to extend your terms or foreclose when the balloon comes due.

Hope that helps!

Dawn

Related Reading:

  1. Marc Faulkner

    We are one of the few firms still actively involved in buying mobile home notes with no land involved in the sale. We also buy mobile home notes where land is part of the sale on a regular basis. As long as the loans are secured by manufactured homes in land lease communities and created by licensed dealers, community owners,banks, lenders and investors nationally since 1999.
    *For single chattel notes (we only buy in W. Michigan and Southern California currently)
    *We work with pools of chattel paper nationally.
    *We buy single mobile home notes where land is included in the sale nationally.
    *We buy pools of mobile home notes with land nationally.

  2. Dawn Rickabaugh

    Hi Marc,

    Thanks for stopping by. I’m sure people will glad to know you’re out there.

    Best wishes,

    Dawn

  3. Corey Bell

    I agree both with you & Marc. But I think the problem with FSOB’s is that a lot of them don’t know and or understand how to structure a note properly, just in case they intend to sell it latter to a note buyer.

    A lot of times their intention is not to sell the note but to hold it, but situations come up and they have to consider selling the note, and that’s where knowing how to structure the note in the beginning, could help them with a strong re-sell latter. Wouldn’t you agree.

    Things they should consider is:

    Credit: I know that the majority of the financial institutions are holding back financing people even with stellar credit, and owner financing is the only way they can sell his/her/their home, but credit credit history is a major determining factor for the note buyer, and knowing or understanding the credit history of his/her/their soon to be payor(s)could aid them in choosing the right payor(s), that may help them in the future, should he/she/they, have to consider and or want to sell the note latter.

    Down Payment: Simply put, the more money the payor(s) put down the better. Not saying they should ask for 50% down, but at least 10 to 20%.

    Interest Rate: Most buyers will not buy any notes that have a 3 to 5% interest rate, they are mostly interested in interest rates of 7% or greater, and no one at this time will buy a note that is interest only, unless the Fico, or credit score is 800 or better.

    Property Value: What it was worth 5 to 10 years ago, may not be what it is worth today, especially in the current market, as well as in certain states the property values are on a rapid or steady decline, and some buyers are frighten that it just will not recover.

    I could continue, but don’t want to take up to much time, But this is what a lot of note brokers/finders/consultants/and buyers should be telling potential note sellers about, because I am sure that everyone hates getting started on a potential deal that you have worked for two or more weeks, with all the continuous steam of questions from your buyer, only to have the deal shoot down because you forgot to do your homework.

    Corey Bell
    Note Financial Services

  4. Dawn Rickabaugh

    Hi Corey,

    Thanks for the commentary… I agree with you on all fundamental points, and, there are usually ways to compensate for various weaknesses, such as credit. We’re all having to get creative about putting things together so the benefits to all parties are reasonably available. I too wish that sellers had a better appreciation for how to structure these deals!

    I know of another guy here locally that has bought quite a few mobile home notes, secured by almost new homes, and where buyers put down 20%+ and had 700+ credit… so it’s out there.

    Best wishes,

    Dawn

  5. los angeles realtor

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