2014 lonnie deals
Crossett, AR · Member since 2013 · 89 posts · 12 votes
2014 lonnie deals
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John FedroPro Member
Investor · Austin, TX · Member since 2009 · 410 posts · 295 votesHi all,
Some great advice given so far. Having a fun time following this thread
@Daniel Warren I would agree with everyone that has already said that Lonnie Deals are over. At least the way we are all familiar with them. Consult your local DMV, manufactured housing division in your state, and talk to them about licenses in your state regarding financing and the purchase/sale of mobile homes in your state. You will get passed around to many different branches and you will learn a ton.
@David Kauzlaric thank you for the shout out.
@Bill Gulley (With humble respect I say the following) Once again I laugh at your posts placing your foot in your mouth speaking about things you preach to understand and do not. I have no doubt you are knowledgeable about Dodd Frank and other acts, however do not pretend that we have talked and you understand what I teach. Do not pretend that you have an idea of how I help people or how my deals are structured. Do not pretend to know that I am in communications with every states' manufactured housing division and run my procedures past them to confirm they are legal in each state. I say in all humble respect that you preach about others you do not know wrongly. You condescend others and I pity your seemingly low self esteem.
Bill, when it comes to giving advice you may wish to begin by thinking what is best for the person asking the question. Give actionable feedback that will help them gain clarity and don't worry about making yourself feel like the man. Stop simply promoting Ken's program and information, which are great from what I have seen by the way, and cursing everyone else who is knowledgeable and aiming to help. I do agree that @Ken Rishel is a great source of information and guidance for anyone interested.
I feel sad for you Bill and your constant attempts to scare investors and belittle them with the limited about of info you know. Again the info about certain subjects is great but you seem to group everyone beside Ken and yourself as untouchable experts in the field. Bill I truly hope you stop your bitter ways and start helping more people than you are condescending. This is starting to feel like high school, stop with all the drama and just talk/type like an adult. We are all here to learn and grow together.
Anyone reading this should be forewarned to not heed anyone's advice except from your own state. Don't take my word, don't take Bill's word, and don't take Ken's word. Do the research for yourself and take the steps needed to invest safely and actually pull the trigger in your own investing business.
All the best,
John Fedro
38 Replies
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes12y
LOST A LONG DETAILED POST TO ANOTHER 522 ERROR!
@Joel Owens
Very good point!
Why even go there? Collect $350 in rents for ten years and hand them the title! They paid you $42,000.00 for your probably $6K can on wheels.
Joe Gore and other unsophisticated landlords all over the country try to charge maintenance to a tenant. This is another point where people who think they know, don't have a clue, maintenance in every state in the union is seen in court rooms as an owner's responsibility. Not only that but you're in violation of Tax Code requirements with respect to depreciation for improvements, so if your tenant paid for the hot water heater or HVAC and it is depreciated as required by you, you just committed tax fraud! This is in residential property leasing not commercial. If a tenant makes enough in maintenance repairs and later you try to evict you may find yourself having to go to foreclosure as they acquire an ownership interest in that unit.
If there is something in your mind that says make the tenant pay for maintenance and you just can't understand the concept of owner's responsibilities and tenant's responsibilities then put rent down at 350 and then charge them 50 buck more and call it a maintenance fee and then you pay for the repairs.
All of that due to one remark about a tenant being responsible for maintenance on a residential lease.
Now, as Joel was saying, why go there with financing when you can rent it and make more in the long run?
It is not impossible to finance an old MH, it's almost impractical to do and be legal considering predatory dealing and lending issues. The down payment is hardly anything, 2,3,4K is probably the usual, I'm sure some guru will tell you to can get 10K (might an a 60+MH) but not these old refurbished cans most try to sell. That can be made up initially in rents on the front end.
You could do a 5 year lease, even ten years, you don't have any mortgage requirements or due on sale to mess with. Your first 2 years rent can be 450, third year 400, last 7 years could be 375, that is an incentive to keep the tenant in there. Or, you could charge 400 instead of 350 getting that 42K, lots of things you could do and make as much or more without ever financing a deal.
Then the astute investors says, Bill, I need the down to buy my next junker to fix up. Take you 5 year lease at 400 to the bank and borrow on the lease income, it's leas financing or factoring receivables, pay 8% interest and factor that into your rents. Now you have your 4K for your next buy!
Sell them and spend probably a grand for the requirements to do it right or break the law, dealing as some scum bag, or rent it and make more ethically.
:)
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes12y
Hey Bill when I have a long post on here or when I am e-mailing someone a long response I highlight it and copy it first.
Then when I hit submit and I get some funky error instead of having to redo it I then copy and paste it again. Problem solved........... : )
- Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes12y
Originally posted by @Daniel Warren:
ok thanks, so you actually have a written agreement then?Daniel: are you trying to build a note portfolio by seller financing? Or do you just have the one mobile to sell? If it's just the one, and you own it in your name or the name of a trust, I'd go ahead and sell it with seller financing. You can do one such a deal per year with no requirement to be an LMO and no ability to repay verification on the buyer. You may want to get servicing on the note though. That way a servicer is crossing all the t's and dotting all the i's on applying payments to the balance and doing end of year statements and communicating with the borrower in the ways outlined in the law.
If you're an entity, you can do 3 such seller finance deals with no LMO requirement, but you are required to do an ability to repay verification.
All of this is clearly spelled out in the Consumer Finance Protection Bureau's ruling and letters on this issue. Many realtor boards and REI attorneys are advising sellers to take advantage of these exemptions unless you have a business model that goes beyond the exemptions allowed.
Find an attorney to advise you. But if they haven't read the laws and/or don't specialize in investors who originate loans, you'll be paying for them to learn. Which I don't advise.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes12y
Check your state version of the SAFE Act, exemptions are not all the same.
Just because you may be exempt does not mean proceed like a wild west show and don't document the ability to pay from any buyer. When or if you get to court for predatory dealing or lending issues, which can arise with one agreement which may be exempt, showing you did your due diligence in the transaction can keep you away from other issues totally unrelated to Dodd-Frank being a requirement. That suggestion being from an experienced lender.
And yes to getting a sub-servicer for your contract/note. :)
- Dallas, TX · Member since 2013 · 4k+ posts · 744 votes12y
Talk to a lawyer before you do anything it could save you a lot of headaches and be careful of people throwing the SAFE Act out there because most don't understand the SAFE Act and will give misleading information. Wish you good luck.
- Investor · Vincennes, IN · Member since 2013 · 223 posts · 108 votes12y
The whole maintenance issue is another paradigm shift we need to be taking in our investing strategies. We have, for years, been proponents of seller financing on homes for the specific reason of passing the maintenance issue to the tenant. I agree with the need to now be providing maintenance on the homes you have, if you are going to a straight rental. Residential real estate is not commercial and judges do frown on passing the buck to tenants, such as in a nnn lease. Is it ideal, no. But it is what it is, just build your rent high enough to cover repairs.
As for the state exemptions. we have properties in multiple states, and trying to figure out state specific Safe Act law, in addition to Federal law, has been problematic to say the least. Kind of makes you miss the "good ole days" days when your biggest concern was whether the each states dealer laws applied to you.
- San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes12y
There's a lot of "heat" going on right now in Congress. Here's the latest news:
http://reversemortgagedaily.com/2014/03/02/house-approves-bill-to-overhaul-cfpb/
Definitely try to stay in the loop on all things political. Resistance is out there due to the misunderstanding of this niche. The manufacturing housing associations with MHI taking the lead are trying their best to help represent our needs on Capitol Hill.
Hope that helps!
- Investor · Jackson, GA · Member since 2011 · 228 posts · 126 votes12y
Do you have a link stating the actual law on the SAFE act? I'm trying to prove to someone that it actually exists.
Thanks.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes12y
LOL, Google "SAFE Act" look for the government URL. Tons of stuff on the Act. Shouldn't be hard to find at all. Who ever you're trying to convince that it exists must live on another planet or not be involved at all in RE, or I guess they could be in RE and live under a rock. You're right, it exists. :)
- Real Estate Investor · Houston, TX · Member since 2010 · 499 posts · 206 votes12y
It seems to me that maintaining the homes isn't a bad idea anyway. If you seller finance a MH and the new owners are responsible for repairs, many of them are going to let problems go until they become much bigger issues. Then if you have to take the home back later, you may be faced with much larger repairs than if you had maintained it all along. Consider a roof leak and all the damage it can do.
I imagine that with the upper level owners someone like Rachel deals with, it may not be such an issue, and maybe she may not have as high a default rate as someone who sells more lower-end homes. But in the lower-end homes I would imagine the default rate is much higher and the lack of maintenance is more prevalent.
Thinking that way, renting doesn't sound so bad to me. Plus, your monthly income is forever or at least the life of the home. Then again, I've never done it, so maybe I'm dead wrong. Any experienced MH landlords on here?
- Investor · Jackson, GA · Member since 2011 · 228 posts · 126 votes12y
@Leslie A. you're right on the money. It's amazing what conditions people will live in when they are responsible for repairs...leaky roof, mold, leaky plumbing, nasty carpet and the list goes on...and then ultimately leave you with $3000 in rehab costs.
- Specialist · Springfield, IL · Member since 2011 · 700 posts · 479 votes11y
There is a new group on Linkedin specifically for Lonnie Dealers
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