Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
Hey folks,
I just bought my first MH, and I'm getting ready to do the rehab and marketing for a buyer.
My question is, how do determine the optimal terms of the note I will negotiate with the buyer? And how should I negotiate it?
The various terms I'll need to nail down are:
- Purchase Price
- Interest Rate
- Number of Payments
- Monthly Payment
I assume the Purchase Price is determined by the seller upfront. And I assume the monthly payments are pretty much dictated by what the buyer can pay (assuming it meets a minimum required to get your principal back in 12-18 months).
So, how do you determine the interest rate and the number of payments?
Do I just pick an interest rate and calculate the number of payments from that? If so, what's a reasonable rate?
Any advice on how you set your terms is appreciated! Thanks...
Investor · Kalamazoo, MI · Member since 2009 · 1k+ posts · 495 votes
16y
I sell mobile home for no less than 1.5 times my total investment. I usually get more than that though when I take back a note on the sale. I usually shoot for doubling my investment on the sale. I then insist on at least 10% down and take back a note at 10.9% for as short of a term as I can get away with and at the same time making it affordable to the buyer. Most of these buyers only care about the down payment and the payment amount once they look at the house. You are smart to assume you use these as your negotiating tools and not the price of the home which you set! Make sure you check out what your states max interest rate is. Good luck to you! These deals can be addicting once you have a few of them paying you every month:)