Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
@John Fedro and other mobile home investors - I might be moving on my first mobile home deal! About an hour ago I as going to ask a simple question in regards to how might getting approved in parks works. I presume that many times I need approval first and then my end buyer needs approval too to live in the park.
Well, lucky me. I got a call from a buyer who wants a specific home but doesn't have the money for it. I explained how I can help out and he told me who to call about the home so I can purchase the home and finance it back to him. For whatever reason I didn't have the realization I'm his private money lender without either one of us using that term.
I'll be meeting with the park owner in half an hour to discuss how this situation would work. I'll be the guy that offers up the money and seller finance it back. Might not be a huge cash flowing deal but at least its an open door at the moment!
Real Estate Investor · Houston, TX · Member since 2010 · 499 posts · 206 votes
12y
Steven,
I think you may be misunderstanding how MH investing is done. You would find and purchase a MH for cash for a very low price - much lower than market. Think several thousand dollars to possibly up to 12 or 13 thousand max.
Then you would finance that home for at least double what you paid for it, and preferably more. Double is what Lonnie Scruggs did in his book "Deals on Wheels". But also read up on John Fedro's blog and Rachel H.'s blog. They mark up more than that.
Also, be sure to read up on the SAFE act and Dodd Frank rules in your state.
Investor · Austin, TX · Member since 2009 · 410 posts · 295 votes
12y
Hi Steven,
Congratulations on the dedication and hard work you have put forth up until this point. Whether or not this deal will work out you are on the right track moving forward. I hope this deal works out in your favor though.
Keep in mind that you are a different buyer compared to the buyer that gave you the lead. What I mean by this is that you can still re-negotiate the mobile home price and terms to fit your purchasing criteria. In other words do not simply take the same "deal" the other buyer negotiated for the home. I hope this makes sense.
In addition if this specific buyer will only pay $XXX monthly (but the market will pay more) then realize you do not have to resell to the buyer that gave you the lead, however it would be wise to give them a finder's fee.
Has this buyer already been approved at the park? Do you approve of this buyer? Do they have good income, decent credit, no evictions, savings, low risk, etc?
Additionally be careful while extending credit or holding financing to your new buyer as some laws specifically forbid certain types of seller financing.
Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
12y
Thanks for the heads up on the negotiating. I'll keep that in mind.
Right now I'm at that point where I need to verify the credibility of this guy and make sure he's up to no no-good.
And even if this guy isn't too interested in what I have to offer afterwards I've got a small list of buyers who might also be interested.
I'm hoping I can negotiate a deal with the park owner to have a clause in the purchase contract that it is dependant upon approval of my end buyer - I'm not sure how that might work. I just want to make sure I don't end up with a home with no buyer.
Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
12y
More good news. I got a call from another interested buyer who was considering a 50k purchase on a home and was totally shocked about how I might be able to help her out in a better way. Again, she has another home in mind for $12,500 that she'd be more comfortable moving into. All in all my one craigslist ad is doing a lot!
I need to make an application at this point and have her fill it out, as well as the first guy, and move forward trying to help these folks out.
Then I need to verify how I get the lien on the homes. Meet with an attourney and verify I can do this type of transaction.
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
12y
Nice to hear!
From experience, I find most folks looking want to find something right away. In the past, I've done the waiting list and by the time I call these folks they've already found something else. Though, the park's waiting list is a different story - these folks want to live in the park and I've had success using their list when inventory comes up.
Real Estate Investor · Houston, TX · Member since 2010 · 499 posts · 206 votes
12y
Steven,
I think you may be misunderstanding how MH investing is done. You would find and purchase a MH for cash for a very low price - much lower than market. Think several thousand dollars to possibly up to 12 or 13 thousand max.
Then you would finance that home for at least double what you paid for it, and preferably more. Double is what Lonnie Scruggs did in his book "Deals on Wheels". But also read up on John Fedro's blog and Rachel H.'s blog. They mark up more than that.
Also, be sure to read up on the SAFE act and Dodd Frank rules in your state.
Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
12y
Looks like the Dodd Frank experts are just tired of the DF discussions and are letting this discussion go, or they are on vacation. :)
Lonnie deals have been out-lawed by Dodd Frank. Don't even think of financing any form of housing to an occupant. Search here on Dodd Frank ended Lonnie deals and similar threads.
Investors will get away with still doing lonnie deals until the borrower reads about DF and decides that paying 3x what you bought it for and 16% interest isn't fair. Every state has a Banking Division hot line. The question is, is there anyone at the state level who'll care and do something? Why risk getting your company's name in the public register? You'll never be able to erase that Cease and Desist order.
Another view is; it takes the same amount of time and effort to do a lonnie deal as it does a larger deal with more profit. So why do them?
We gave up on Lonnie deals before DF due to park managers shutting out investors here around Atlanta. We are now buying doublewides titled on land, doing rent to own, then owner financing Dodd Frank compliantly. Very profitable.
Real Estate Investor · Houston, TX · Member since 2010 · 499 posts · 206 votes
12y
I'm not advocating Lonnie deals, Curt Smith but you ask why do small deals instead of large deals? Because you don't have a lot of money or borrowing power. That's why.:)
Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
12y
there's lots of deal types that make big profit and little cash. Search here on:
- subject to existing financing
- wholesaling lease option
Some investors find doing the above deal types so desirable this all they do.
Creative deal structuring will get out of the mind set that real estate is about controlling a deal with a cash offer. Some say they haven't used cash to do a deal in years.