What would you offer on this note?

Question

Hello all!

I am looking at my first note purchase and am not sure how to determine a reasonable offer. Here are the details I have on the note:

$29,900 Sales Price of property when note originated
$ 1,500 Down Payment 
-$28,400 Original Balance 
-$ 474.38 Principle + Interest Payment 
-$ 50 Taxes & Insurance 
-$ 524 Total Monthly Payment 
107 Months Original Term 
87 Months Remaining 
14.50% Interest rate on note

So, I know I would need to find out what the current value of the property is, the payment history of the buyer, their credit score. Any other information I need to ask for? Also, any suggestions on what to offer or how much to discount it?

Thanks everybody!

Jon Klaus · Answer

Does the mobile home include the land or just the home?

Age and size of the home?

Lot rent, if any?

Jon Klaus · Answer

I'd reach out to Marc Faulkner here at BP for advice.

http://www.biggerpockets.com/users/NoteBuyers

Liquidation value on that singlewide will be a lot less that a SFR on dirt, so I'd suspect the note is worth a lot less, too.

Marc Faulkner · Answer

Sorry I have been so busy I have not been paying attention to my favorite forums!  I would like at the wholesale value of the mobile home.  What can you sell it for all cash, right now?  I would not want to own the note for more than 70% of this number.  I would also want to make sure that the mobile home was located in my service area or that the note seller would agree to stay on the hook in case I were to need any help with the resale.  With that said-I may be interested in seeing if there is something we could do together on any of the notes in this pool that you are not personally interested in.  We have handled millions in bulk chattel sales and have plenty of references.  I would look forward to working with you.

Jon Klaus · Answer

As a Lonnie dealer, I wonder why you are considering buying a note like this when you could be creating them for a lot less, seasoning them, and then selling the notes.  Shouldn't you be able to buy a MH like this for $7K cash and sell it for for $25K, with $1K down and payments around $350?

I'm not doing exact math here, but you could season that note for a year and sell it yourself for what, $18K?  Of course the key is buying the MH right, but that's what Lonnie dealers do.  I have not done these, so someone jump in to tell where I'm off.

R Jenkins joshua · Answer

Please contact me at 414 795 3229
or send me an email

If your still looking for quote

I like to talk with Note Holders 1 on 1 versus indirect quotes
Ramon

Jorge Garcia · Answer

120 Original Term
5/6/2008 First Pmt Date 
5/6/2018 Last Pmt Date 
Thats 121 Pmts

Also if only 16 payments have been made, then the last payment was 8/6/2009 based on your start date.

If this is a non-performing note then you need to get a much bigger discount.

Loc R. · Answer

I'm going to assume a $5000 down payment since:
          
          N = 120
          I = 12.75
          PMT = $236.54
          PV = $16,000
          
          $11,500 represents over a 20% discount off the UPB, and of course a 20%+ yield.  I don't know if they'll take it, but if they do, that's a nice looking MH note deal.

Brittany L. · Answer

So I got in contact with the seller and it turns out they have a portfolio of 40 or so mobile home notes. I found one in particular interesting due to the equity and the buyer is making two pymts/mo.

1999 Fleetwood "Festival" 16' x 76' 
1,178 Sq. Ft.

$21,000 Sale Price 
$14,804 Current Balance 
$ 236.54 P & I 
$ 49.00 T & I 
12.75% Interest Rate 
120 Original Term 
104 Pmts Remaining 
5/6/2008 First Pmt Date 
5/6/2018 Last Pmt Date

I loosely told him over the phone I wanted a 20% return or more, which would be a little over a $11,500 purchase price. Any thoughts on this one? I think I will get Marc's opinion on this one as well.

Jon Klaus · Answer

You are welcome--lot's of great people and knowledge here.

Brittany L. · Answer

Thanks Jon!

You have been so helpful to me!

What would you offer on this note?

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