Las Vegas MotorcoachBut, before making that purchase, it’s important for RVers to consider all financing options available to them. Sources show, in some cases, it may pay for RVers to borrow from themselves.
By Dean Welsh
It might best be described as an old fashioned land rush. Sales of RV motorcoach sites in the Southwest, most specifically in Las Vegas, are setting five year sales records. Yes, there was a big slump when the real estate market in the U.S. crashed a few years ago, but in this past year, the market is experiencing a big upswing in sales. Although prices are far below their previous all time highs, there is steady movement upward and room for continued appreciation.
With that being said, many Canadians have been to our resort and made great buys on very superior sites. Our Northern neighbors relish the idea of ownership in a one-of-a-kind resort in a one-of–a-kind city because of the diverse activities both on-site and in the lively Sin City. But what they really have discovered that makes ownership even more appealing, and certainly easier, are the great terms they get when they purchase.
In many cases, the sellers of these motorcoach sites are willing to carry terms themselves for new buyers. Doing so eliminates the hassle typically associated with traditional real estate lenders and mortgage companies. Sellers willing to carry the note and trust deed rarely ask for even a credit report. There are no appraisals to wade through, no protracted intrusive applications to complete, and in a typical purchase transaction, the process can be finalized in as few as ten working days. Many buyers have stated that purchasing a motorcoach site at a resort in this manner was the easiest real estate purchase they have ever made, and truly was a win-win for both the buyer and seller.
But, before making that purchase, it’s important for RVers to consider all financing options available to them. Sources show, in some cases, it may pay for RVers to borrow from themselves. Financing motorcoach sites using retirement payouts, proceeds from the sale of a residence or other income to make the purchase for cash can be effective methods. In addition, borrowing against a paid-up whole life insurance policy is another option. If the cash value of a policy is large enough to cover the annual interest payments, RVers can skip making monthly payments, if desired. However, there are significant disadvantages to self-financing that RVers should be aware of, such as taxable capital gains or early redemption penalties, plus having the total purchase price tied up in the property. It is important for RVers to weigh out the pros and cons of self-financing so that they make the right decision for their future and their bank account.
Of course, you could do the self-financing, but why do that if there is an even better opportunity out there? Typically, a seller willing to carry financing will accept terms of a modest 20% down payment of the agreed upon sale price. The balance can be calculated on a 30 year payment schedule at interest rates from 5% to 6%, with the entire unpaid balance due five years from the transfer of ownership and closing of the escrow. This affords the buyer the opportunity to leverage into the purchase without liquidating other assets.
And, for the seller, this also gives them a five year income stream on a secured investment at a much better income interest rate at 5% to 6% than they would get in a typical money market or CD if they received all cash for the sale. With a market still offering some of the best price values in motorcoach site ownership history and easy and stress free terms, it is no wonder many of our friends from the Great North make ownership of these outstanding properties a priority.
*Dean Welsh is an On-Site Broker at LVM Resort, Las Vegas Motorcoach Resort, in Las Vegas, Nevada and can be reached at http://www.lvmresort.com/realestate/ or at dean@lvmResort.com. Mr. Welsh has been involved in the development of Las Vegas’s real estate market for over 25 years.