Basically the title,
There is an old mobile home lot in my area that I am looking to reach out to the owner to pitch him a deal of me fixing up and selling the vacant mobile homes on his lot and keeping the profits from the sale. This would therefore improve the living conditions of his mobile home park and he will receive more in lot rent when I’m done fixing up the units for not time or effort on his end.
Would this strategy work? This would be my first investment so I’m trying to think a little out of the box here so feel free to critique my plan.
Maybe, but probably not, most mobile homes are individually owned, but if it is vacant and has been abandoned the owner of the park may have foreclosed on it, check your county records to find out though.
I think it's worth trying. Just make sure they can give you clear title to it, if they agree.
@Josh Edwards read the book Deals on Wheels by Lonnie Scruggs. You should be able to find the PDF for free online. He use to be the expert on doing this and to this day we call them Lonnie Deals.
the short answer is yes it is very possible the owner of the park owns the trailers as well. Every state has different rules of the park owner taking possession of the home back.
the trailers are just like your car so you do the transaction at the DMV. There can be a lean on the title even without it printed on the title itself. You also want to match up the VIN that is physically on the home with the title you’re being given.
Hope it works out and you make some $$!
Ok great thanks guys! I’ll try it out.
They're called park-owned units. Lenders, for the most part, hate them.
Some guys can make money off them, but then the owner needs to do maint on them, so there is that cost vs. tenant owned units.
@Josh Edwards a little bit of simple research will help you get pointed in the right direction. First, determine if the lot is in a mobile home park or not. Jump on the assessor's website, find the parcel maps and look at the aerial view of the subject home. If the subject home is on a large parcel along with a bunch of other mobile homes, then that is a mobile home park. However, if the subject home (and all the other mobile homes around it) are on their own individual parcels, you might not have a mobile home park, rather a subdivision of mobile lots. There are rare occasions where a mobile home park is made up of individual parcels (I know this because I own one such park) but it is not the norm.
While you are doing that research, make a note of the owner of the parcel. Hunt down a phone number for the owner and call them to ask if they would be open to the idea. You can also approach the manager that lives in the park or works in the office at the park.
If the offer you make to the owner is one that will be in the best interest of the park, you will likely get a favorable response, particularly if the owner doesn't have a solution in place for renovating park owned homes.
All the best,
This is a process that finds the vacant, locates the owner (vin number), gets control of the title, rehab and sell. Sounds simple, well...
Some things to think about if you plan to scale this model.
Today, the mobile home flipping business model depends on the number of units you plan to flip in a year and how your buyer will finance the homes.
- flip too many, the state will require you to be a Dealer. Indiana it's three or more in a year and you must be a dealer for example.
- Financing has to be compliant with the SAFE ACT and NMLS. If you get busted, the fines are devastating so tread carefully with owner financing.
- A good park owner would only allow you to flip the homes, not rent them so plan to sell your rehabs
- title issues are rampant with vacant mobile homes and sorting that out can be a PITA and expensive in some instances.
Not to discourage you but the days of Lonnie Deals are over as he describes them in his book, not saying it can't be done but to do it legally and be compliant, requires a bit more rigor and working closely with your park owner and a licensed MLO/NMLS lender who can process and fund loans to your buyers. The most difficult obstacle is the dealers license.
Can you fly under the radar and deal, you can but is it worth it? As a park owner, I wouldn't allow it in my parks.
To do this the compliant way, I think you would need to partner with a large park, convert the first rehab into an office (or work something out with the owner to borrow space) to satisfy the dealer requirements, build a channel with 1 or 2 lenders, then go 1 or 2 homes at a time, acquire, rehab, market, sell, repeat. The other challenge is making sure the remodeled home qualifies with your lenders underwriting requirements AND you actually make money doing this. If memory is right, Triad for example won't fund anything pre 1994.
If you want to try 1 without all the rigor, I'm sure you will be fine but if you want to scale this model up, it will requires some real structure to be legal and successful.