In-House financing for customers???

[BladeRunners]

As our company grows we are doing larger and larger installs, a couple of our last estimates ranged between 20 and 30g's. I was wondering if anybody out there offered financing for their customers either in-house or through a third party?
Any info would be appreciated.

[Phil Nilsson]

Offer it and add one big advantage ... no payments until X DATE ... actually if you do this right and qualify the folks you can't lose. However ... you'll be competing with low interest equity loans and comparative shoppers interest wise but even so ... it's great Public Relations ... because it tells your customer they are working with an established and somewhat "sophisticated company and if you never get to actually finance a job that can't hurt you in any way.

It's all about good credit ... and the amount of equity they have in their home ... end of story. If they don't pay and you want to act like a crook (which I don't buy into but different strokes for different folks) if you foreclose on the mtge .... you stand to make a killing keeping, renting, selling, or disposing of that property ... Myself I wouldn't do that because I like to sleep at night ... but it's being done by others who are perhaps less heartless and they get rich off it sometimes.

Bottom line ? ... you can't lose if you do it right. Cash flow you say? that's a problem you say? .... not on your life because with a mortgage position on "good real estate" you can borrow money from banks or 2nd or 3rd world lenders with no problem .... on your note receivable if you get into a cash jam.

[BladeRunners]

Thank you for the input Phil, I appreciate it. Just wanted to get another opinion on it, if it was a wise idea or not. I have a call into my local bank, and the company that does our merchant account, they both handle, customer retail financing. I really think it will make a difference in the size of the jobs we can sign. People now a days live on credit, and if they can get it financed, and pay a little today and a little tom....that means more money in my pocket!

Thanks again.

[lclandscapes]

As our company grows we are doing larger and larger installs, a couple of our last estimates ranged between 20 and 30g's. I was wondering if anybody out there offered financing for their customers either in-house or through a third party?
Any info would be appreciated.

We offer financing on every proposal that we send out. We use John Deere Landscapes for the financing @ 6.5%. 90 days same as cash or monthly payments. You can add just more than landscaping to the customers bill, such as a concrete patio, or outdoor lighting. It has helped us grow our business very well. Check with you local John Deere Landscape Supply store and they can give you all the details.

[Phil Nilsson]

One last thought ... perhaps?

At some point in time ... self financing ... (you carry the note yourself and not a John Deere or bank etc.) ... can be a great money maker for you and add some "premium bucks" to your gigs. Commonly called Interest Income ... which is what banks and financiers obviously live off and get rich by as well.

Okay ... but ... it's great ... sure ... but ... do this to avoid getting stung or in a bind where you mess up your own working capital ....

Set up a half hour appointment with a CPA .... your CPA ... this will cost you a hundred or two of the best money you ever spent ... have him do this for you ....

Have him come up with a simple schedule that you can use to quickly know when and where not to finance a job ... when and where and what interest to charge WHEN you do finance a job based on the total sales dollars of that job ... that info is overlaid via your own personal financial "condition" with which he is very familar with ...

This will tell you when, how much, and potential earnings etc etc that YOU can expect to make from self financing.

INTEREST INCOME is easy money ... in fact maybe the easiest money anybody can ever make. You go to sleep at 11pm ... next morning you wake up at 7am ... look into your account and see that overnight it grew ... what can be better than that? ... a BMW, sex, your mother-in-laws cooking?

Remember ... CPA first .... his analysis second ... your outcome third. No missed steps.

You gotta love that easy money.

[lclandscapes]

Phil,

You make a good point, however I wouldn't take that risk. If customer doesnt pay, you go to court, you get a judgement or lien, and it could 1 to 20 years before you get your money. Meanwhile I am still floating the bill. I would rather use a "John Deere or bank" due to I get money when I need it and not when the customer should feel like paying. I dont know to many landscapers that would offer self-financing for that simple reason. 3 accounts decide not to pay or file bankruptcy and you are S.O.L.

[rat_race_engineer]

Also, in NJ, if you are a home improvement contractor and offer financing, you need a contractors license. I would interpret landscaping to be home improvement and fall under that umbrella.

[Phil Nilsson]

Phil, If customer doesnt pay, you go to court, you get a judgement or lien, and it could 1 to 20 years before you get your money. Meanwhile I am still floating the bill. I would rather use a "John Deere or bank" due to I get money when I need it and not when the customer should feel like paying. I dont know to many landscapers that would offer self-financing for that simple reason. 3 accounts decide not to pay or file bankruptcy and you are S.O.L.

I should have clarified further ... that if it were me offering the financing on any good sized job ... the dollars (loan) would have to be secured with a real estate position only ... NOT a note, loan or unsecured "note" or trash paper on that property or another owned by the customer ... that note would also have a short "wick" ... no pay clause ... then possible forecloser action on the real estate that "secured" the deal ... in addition it would also contain a very (fast) ... set of provisions loaded with a heavy foot on the pedal ... to avoid set backs due to conditions that prevent early court decisions on foreclosures on homes ... (like kids still in the school year) etc. in the state of Florida I think this is a problem ... but with a mortgage provision and accelerated "events of default" ... such as extra heavy duty penalties and stiff interest rates when the note becomes overdue ... it's in the homeowner's best interest to pay up quick ... or get thrown out since it will cost him or her big interest bucks to avoid actions and delay the game ... more delays mean you get fatter $$$ and they get thinner.

Even the above would not prevent me from financing since over the course of the "wait period" the property would rise in value ... in addition, if the loan goes into default ... I insure the property (since I hold a note and have an insurable interest) for any deliberate property damage or reduction in the value of the property that would otherwise compromise my financial interest in it ... like if the owner decided to burn it to the ground ... I'd be paid directly from the insurance company ... because "in essence" I own a share since I hold the mtge note on it.

Like I said earlier ... while there is some risk ... it's almost impossible to lose ... even with no home remaining there at all ... the land still holds value ... and depending on the mtges ahead of you ... 1st, 2nd, and so on ... ... recover your loan even in the absence of an actual physical structure ... all you need is a simple insurance policy on the home to cover your note in the event of a fire ... or if they decide to dismantle the home in pieces and cart it away ... the land is still there ... right?

It all depends on how much equity they have ... in the property that places you on a "scale of risk" .... like a ladder with steps. In most markets real estate values have been rising fast so it may not present a problem at all. Myself ... given the right circumstances ... I'd self finance and make the interest income ... and if I got tired of doing that ... I could always sell the mtge to somebody else ... mtgs are bought and sold on the market everyday ...

Phil

P.S. Do I want to throw a family out on the street, take their home away from them because they didn't pay the landscape bill? ... NO ... but I could if I wanted to ... so guess what ... the parents or the grandmother will give them the $35,000 or whatever to keep them in the house and get the landscaper paid ... because in a foreclosure deal ... I could elect to sell the house at a very low price ... right? ... a giveaway price ... so once more what are we saying here? ... if the homeowner has a good amount of equity ... YOU are covered ... almost 100% ... not quite ... 9999999999.99%

Option #3 ... I could take first mtge position by paying off #1 and #2 ahead of me ... foreclose and keep the house ... not sell it but like ... rent it ... move into it ... own it. And ... again ... if there's a lot of equity ... I stand to make a killing since if they owe me $35,000 on the landscape bill yet after I pay the first and second there is let's say $50,000 equity ... then I just made an extra fast $15,000 ... right?

[Scaper-S2k]

Personally I think you would have a hard time finding someone to sign a paper basically saying "Landscape Company will take your home if you don't pay". Because fact of the matter is, that's not even legally binding.

I've had people file bankruptcy on me before. Owing $50,000. Having a lien doesn't mean you will get your money. People spending $30k on landscaping might have a home worth $400k, but owe $380k. So, even if they had to foreclose, many others are standing in line next to you for money as well. Not to mention that they probably have tons of other debt to pay off. Try dividing up $20k by 25 people wanting money.


Use a bank or other finance companies unless you are doing millions and millions in sales and can afford to lose a couple. THAT'S the way banks do it. Win most, lose a few. But on a grand scale.



I'm not trying to argue with ANYONE, just giving warnings from my past experiences. I was lucky that I could eat the $50,000. I saw nothing from it, and did EVERYTHING I could do. It's not IF someone will screw you, it's WHEN will you get screwed. Because it will eventually happen. And even if you are making 6.5% off 8-10 jobs, lose just one and all that intrest you earned is gone.....and then some.

[Phil Nilsson]

Basic Finance 101 says that you don't get "screwed" with a mortgage position UNLESS ... there is a problem with what? .... the IRS and taxes ... and what? ... a low equity position ... other than that there is another item ... if the land the house sits on is subject to "The Super Fund" ... know what that is? ... contaminated land not fit to live on ... then okay I guess you can lose ...

Beyond those extremes ... ????????? ...... LOL

Do you picture all of those things happening to you and keeping you awake at night? ... if so lock yourself in a rubber room, bomb proof, bullet proof, atom bomb proof, and ah .... with a 5 year provision of food and water and bottled air ...

I am laughing so hard right now I think I might fog over my computer screen ...

[Scaper-S2k]

Whatever Phil. Why can't you just leave my post be? Why go off on some junk about locking myself in a 'rubber room'? Get real.

I'm sorry, but you are incorrect about this. You CAN lose your butt by financing someone's landscape job.

Common sense. It doens't matter if you have a lien or not. If that person files for bankruptcy, or their home is forclosed upon, there are likely MANY others standing in line waiting for money as well. There is only so much money to go around. And chances are, if they are at the point of foreclosing, they owe A LOT of people money. And all the other loan institutions probably have first dibs on the $$$ because they had those documents signed before you.




ALSO, you may not even be able to file a lien legally. There are time frames, and other stipulations. Time frames that might run out for you while they are still paying on the loan! If you haven't been on that property for 'x' number of days, you could have problems. Then ask a lawyer what can happen if you try to file an false lien!! It's called Defamation of Title (or something like that). Then the person holding the title can sue YOU!!


Is all of that worth it? Maybe if you sold $2,000 air conditioners, mowers, or furniture. Lose a few of those? No biggie. But not $30k - $50k landscape jobs. UNLESS you can afford to lose a few, as I stated in my above post.

Phil, you talk a LOT of big stuff, but you never did any of it. Anyone can sit there are say "Do It". You don't have to worry if they get screwed or not. Wait, wait, wait, tell us a "true story" about how you had a million dollar job that you financed back in 1979! They were so happy that they gave you an additional $10k so you could go on vacation. ORRRRR, GET REAL!!!!

Go "lock yourself in a rubber room"...... But first tell me how wrong I am.


Ooops, I forgot the smiley face......

[lclandscapes]

Whatever Phil. Why can't you just leave my post be? Why go off on some junk about locking myself in a 'rubber room'? Get real.

I'm sorry, but you are incorrect about this. You CAN lose your butt by financing someone's landscape job.

Common sense. It doens't matter if you have a lien or not. If that person files for bankruptcy, or their home is forclosed upon, there are likely MANY others standing in line waiting for money as well. There is only so much money to go around. And chances are, if they are at the point of foreclosing, they owe A LOT of people money. And all the other loan institutions probably have first dibs on the $$$ because they had those documents signed before you.

ALSO, you may not even be able to file a lien legally. There are time frames, and other stipulations. Time frames that might run out for you while they are still paying on the loan! If you haven't been on that property for 'x' number of days, you could have problems. Then ask a lawyer what can happen if you try to file an false lien!! It's called Defamation of Title (or something like that). Then the person holding the title can sue YOU!!


Is all of that worth it? Maybe if you sold $2,000 air conditioners, mowers, or furniture. Lose a few of those? No biggie. But not $30k - $50k landscape jobs. UNLESS you can afford to lose a few, as I stated in my above post.

Phil, you talk a LOT of big stuff, but you never did any of it. Anyone can sit there are say "Do It". You don't have to worry if they get screwed or not. Wait, wait, wait, tell us a "true story" about how you had a million dollar job that you financed back in 1979! They were so happy that they gave you an additional $10k so you could go on vacation. ORRRRR, GET REAL!!!!

Go "lock yourself in a rubber room"...... But first tell me how wrong I am.


Ooops, I forgot the smiley face......

Ditto. Exactly what I was saying earlier.

[Seascape]

Cmon Phil,,, keep it real buddy.

[BladeRunners]

I have to agree with Seascape. That is just way too much bulls**t to have to go through. Yes, I want to offer my customers an easier way to come up with large sums of money. But I also want to be able to sleep at night knowing the money for that job is already in the bank!

Let the finance company do the credit checking, and all the other nonsense. I'm in the Landscape industry not the banking industry!

I do however thank all of you for your input!!

[Phil Nilsson]

Scaper-S2k says ...
I'm sorry, but you are incorrect about this. You CAN lose your butt by financing someone's landscape job. Common sense. It doens't matter if you have a lien or not. If that person files for bankruptcy, or their home is forclosed upon, there are likely MANY others standing in line waiting for money as well. There is only so much money to go around. And chances are, if they are at the point of foreclosing, they owe A LOT of people money. And all the other loan institutions probably have first dibs on the $$$ because they had those documents signed before you.
____________________________________

Phil's Answer ... I said .... I would take a "secured position" ... a "mortgage position" ... (not a lien) you don't stand at the back of the line (when you have a mortgage position) if a bankruptcy is filed ... a secured mortgage position takes priority (regardless) of many, many other creditors ... except who? ... who are they? ...

Phil