Why Warren Buffet is so dang rich...
There is a premise in real estate that fair market value is the price met by a willing buyer and willing seller without outside influence and unrelated to financing terms. I get the idea but I dis agree. Of course the premise is that when supply and demand meet then that is the fair market value. When I went in to this project I presumed it was going to be a cash deal beginning to end since "nobody" does mortgage financing on manufactured homes.
But what if there were financing available? I believe that by having financing it increases the pool of available potential buyers and raises the demand level thereby potentially raising the price. More buyers means increased demand so price goes up. I contacted several mortgage lenders and a local community bank and none of them finance manufactured homes. I made the comment a couple of times that it might be a good niche to fill. Maybe require a little more down payment than a traditional home, maybe a little higher rate, maybe even shorter loan terms. The loan could be adjusted so that it does make sense for the lender and is still a good deal for the buyer.
So what does all of this have to do with one of the richest men in America? Warren Buffetts Berkshire-Hathaway has evolved over the last several years from buying stock to buying entire companies. They have heavily invested in housing related industries, including 21st Mortgage.
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