Just Closed Today! 2/1 MH on a 1/4 acre for $4k.
Real Estate Investor · Arlington, TX · Member since 2014 · 33 posts · 14 votes
My wife hates MH's but for $4,000 who cares...lol I put an ad on CL for $285/month and had 9 phone calls by 2pm. The MH is an older model and is in fair condition. The value is really in the land though. I could give the MH away and just rent the lot for $200 - $250. For now I'll take the $285 and see how my new tenant works out.
@Dwight Crocker, @Joseph Ball,
Secure a Mortgage Loan Originator MLO to work with. Local REIA probably has someone workable. It may cost you $300-$500 per deal. Add it to the deal as a loan origination fee like a stick built loan. Borrowers pay that on every financed stick built house. Why not mobiles? Then do the Lonnie deals. The interest is an caution. Just build it into the profit and do zero or lower interest.
I made one posting to the local REIA forum and found a good MLO locally. She said "It's 3 pieces of paper. No big deal!"
@Curt Smith Thanks for the car tip. One technique, I used for years on Lease Options was to 'forget a vital piece of paperwork' when taking an application. I'd 'swing by' their current residence, 'since I was in the area anyway' and see how the place looked. If they didn't invite me in, I'd ask for a glass of water or use the restroom. If scary, unfortunately they didn't qualify. Checking their car would save a drive. Thanks!
I wish I could find that cheap of property here! I wonder if you could rent it for more money if you got that many calls that fast? Nice job.
I wish I could find that cheap of property here! I wonder if you could rent it for more money if you got that many calls that fast? Nice job.
There isn't a lot of $ running around Wichita Falls so I wasn't sure what to expect. I'll slowly bump it up over the next few lease cycles and see what happens.
My other thought was, at this price who would want to ever leave. I has one house several years ago where the first tenant that moved in was there for the full ten years it took to pay off the mortgage.
I'll still go ahead slowly raise the rent in small $10 - $15 increments. I'm guessing that amount won't be enough to make anyone want to move.
Have you read Deals on Wheels, by Lonnie Sinclair?
OH! Congrats! Good job!
Of course, your wife is right. You can't make money on mobile homes. LOL
Someone once told me I couldn't make money on single family houses. I went out and made money on single family houses. He said, "Well, yes, but you can't do that any more. You just got lucky." LOL
It's been slow to get the word out but Lonnie deals, buy cheap MH's, fix up, then finance the sale to a buyer at interest rates in the mid to high teens has been done away with by Dodd Frank. Lots of experts here will still advocate financing MHs to end buyers though, so a few are still saying do it doesn;'t make it a good idea. Renting MHs isn't a Lonnie deal in my view. Lonnie's gig was charging 18% interest on financing to occupants.
I would have bought that MH on land myself... But I would never attempt to rent it.
In the South it literally is difficult to make money renting MHs because one renter can tear a home up in no time flat and you'e negative cash flow for that year. It's mainly luck if after a few years you're ahead.
When evaluating mobile home parks for example, you toss out the home rent and only consider lot rent as a side note that the "pro's" in the MH business put so little value on home rent because of the turn over ( and eviction) costs to make the home rentable again is so high. Year on year it about breaks even in the South.
I hear though that North of the Mason Dixon line MH renters don't tear things up some times not at all!!!
Our business model in GA is to buy double wides on their own land cheap, fix, then rent to own for 12 months, then we finance into a mortgage. Double wides never had wheels and are on cement block foundations so can be argued they are manufactured homes, not mentoined in Dodd Frank like mobile homes are (specificaly called out as out lawed for owners to finance just like Builders can no longer finance their spec homes) so we can do 3 financings per year per person using a Licensed Mortgage Originator and qualifying to 43% DTI etc all mentioned in Dodd Frank. This way the occupant is not a renter but an owner or heading to ownership. World of difference. Cap rate on this type of deal varies between 25% and 30%. I'd NEVER consider renting these double sides and I'm in this business but I'm in the South!
There are folks here who claim to make money renting MHs. I don't doubt it's possible. Screen your tenants like a hawk. I use mrlandlord.com. I call ALL their past landlords. I do drive by of where they currently live. I call all employers and quiz the employer looking for fake employer / pay stubs being given to me. On craigslist I've seen ads "cheapest fake pay stubs here". Be ware of taking pay stubs and not verifying employment and income. Assume the person you are talking to is the renter's brother faking it. :) Try to word the questions such that they will out themselves as fakes or are the real employer.
One very important tip: walk the renter prospect out to their car. Look INSIDE and it must be neat as a pin. If the back seat foot wells are full of trash, that back seat is how your rental will look in a month or two. I don't like renting to folks with expensive cars either. This to me shows bad judgement. Their car payment will eat your rent payment in no time. They know they can game the landlord longer than they can game the car lease company.
@Curt Smith Thank you for these great tips for investing MH. It' is always alluring to want to buy into this type of real estate because of the initial low investment. Here in SoCal, I am running into a lot of parks that would rather lease the land rather than allowing me to finance the land as well. Great tips to consider in general, thanks again.
@Dwight Crocker I forgot to congratulate you on your recent deal. Way to go :)
@Joseph Ball you're an old fart like I am, and Dodd Frank has put some hurdles into the road of REI. Lonnie is dead on a few fronts.
Ask @Bill Gulley
@Curt Smith is an expert in MH and so is @John Fedro who has an awesome blog.
I welcome you to my blog here
http://www.biggerpockets.com/blogs/3-reiskills-and...
I look hard at seller financing with sellers that can not sell (SFH, not condos or THs) and pair them with high income but debt or FICO challenged buyers.
I buy on sub2, wrap or control w LO or SLO, then exit w LO or Lease and ROFR.
If you ever want to chat on the ph, see my signature.
I like the votes your getting, by the way!
Brian
Sounds like a great deal, congrats on snatching that up, 4K, wow!
Don't forget to do your due diligence regardless of price, I've seen things where it was thought to be too good to be true and it ended up too good to be true, LOL, one was a lot full of PCBs! Doubt you have such issues, just saying always do your homework.
I don't think Joseph needs more hammering on Dodd-Frank, predatory lending and dealing, that what some crooks might do isn't the way to really profit in the long run or that Lonnie Deals were specifically mentioned in the Dodd-Frank/ SAFE Act specifically as an unacceptable business practice or that if anyone attempts to devise some method to circumvent the intent of the law with respect to such transactions would also be a covered matter under the law.
I just don't see any reason to mention this stuff again, I'd think everyone has had plenty of time to read these Acts in their entirety, digest them, read forum posts, seek legal opinions and have compliance reviews by qualified persons. It's just not something folks in the MH world need to be concerned with or attempt to do that stuff anymore. :)
Old fart, here. LOL. (You're right!)
I had understood one could do up to three seller finance per year alone, but if you do more than three, you needed Licensed Mortgage Loan Originator. But you could do lots of "Lonnie Deals" using Licensed Mortgage Loan Originator. Am I wrong?
Thank you for all the kind words and I liked seeing some owner finance information. I wanted to follow up with where the deal came from. I was just looking at all the housing sections on craigslist in my part of Texas. The seller posted the ad Wed. for $4,000 MH and lot around 10pm and I saw it about 30 min. later and emailed him a lowball offer figuring the home must be ready for the landfill. He texted me back around 11:30 but I had already hit the sack. In the morning I shot him a text back and he responded. I called him on the way to work and we worked out a deal over the phone by which I mean I agreed to his asking price. I went on line and checked out the taxes and any liens it might have. I emailed him the paperwork Friday to get notarized. We met Saturday to inspect the property and finish up the paperwork. The deed is in the mail to the courthouse and I've got the keys.
@Dwight Crocker, @Joseph Ball,
Secure a Mortgage Loan Originator MLO to work with. Local REIA probably has someone workable. It may cost you $300-$500 per deal. Add it to the deal as a loan origination fee like a stick built loan. Borrowers pay that on every financed stick built house. Why not mobiles? Then do the Lonnie deals. The interest is an caution. Just build it into the profit and do zero or lower interest.
I made one posting to the local REIA forum and found a good MLO locally. She said "It's 3 pieces of paper. No big deal!"
@Curt Smith Thanks for the car tip. One technique, I used for years on Lease Options was to 'forget a vital piece of paperwork' when taking an application. I'd 'swing by' their current residence, 'since I was in the area anyway' and see how the place looked. If they didn't invite me in, I'd ask for a glass of water or use the restroom. If scary, unfortunately they didn't qualify. Checking their car would save a drive. Thanks!
Quoting Bill G who sums things up the best of anyone, don't take legal advice off the internet. :) My first hand experience is that also don't ask a real estate lawyers about banking laws. IE most lawyers don;t know much at all about Dodd Frank but some seem to sell their advice anyway.
Become your own expert by reading the legislation. Brian Gibbons has a document site of snipped up pieces of the legislation.
To the best of my recollection of the exact wording: everyone who originates loans to owner occupants, MUST be a licensed bank. Unless you qualify for the few exemptions. This sets the context that you must be a licensed bank period. Exemption #1 You are financing the home you are currently living in. Exemption #2 You are a natural person originating 3 or less per year. In both exemptions you don't have to use a LMLO... watch out: the legislation goes on to say, but you are STILL held to following all guidlines. I interpret this to mean, just pay the lousy $750 (in GA I found a few between $600 and $750) and qualify to 43% DTI. So no you can't originate more than 3 per year without being a licensed bank, per my reading. Do you own reading I recommend. The natural person requirement is ignored by the lawyers who say just keep on creating LLCs after another doing 3 each. I don';t think that will stand up. But 3 in your name and 3 in your wife's name should. We buy into our own names, not our LLC for the purpose of seller financing the exit... Unless the investor lobby gets this whole seller financing part of DF removed with subsequent legislation.
Your very very low rent made me think of your situation in this BP article:
http://www.biggerpockets.com/renewsblog/2014/12/02...
You might be running a negative cash flow business at only $243/mo. Can't see how you'll make enought to cover a eviction every 3 yrs and total rehab every 3 and new paint and some plasterboard every turn over (12 months in this business).
Add up:
- taxes, insurance,
- opportunity cost of $4k cash
- turn over every 12 months expenses ?? Ask other MH owners in your area.
- an eviction and total rehab every 3 yrs.
- Fix leaking roof, rotten sub floor every 2 yrs.
- a used appliance every so often or on the eviction where they take the appliances every 3 yrs.
I think you're negative cash flow?? What are your numbers?
Dwight,
Great job on getting a great deal!
Have you already rented it? If not, please make sure you're charging market rent. I don't know what your market is like, but around here, you could probably get 600-700. Charge it! Like Curt said, you are going to have lots of expenses. I think he's way too pessimistic, but anyway, you will have expenses and you need to make some money. That's the whole point, right? :)
@Curt Smith and @John Fedro and can keep any REI new or experienced in the "MH space" out of trouble and in profit better tan ANYONE POSTER on this BP board because of their direct experience, IMHO.
I know. I wasn't criticizing Curt at all. Hope it didn't sound like it. Highly respect his opinion.
And John Fedro - he's the best!
Who is the best RMLO in TX?
For REI?
I only know of Mindy Henderson
http://ntarei.com/event/all-investors/
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A real nuts-and-bolts presentation.
Seller Financing: Closing the deal - what to do and not do.
presented by
Mindy Henerdson, Investor, Landlord, RMLO
This presentation will cover, step by step, exactly what you must do to close a deal using owner financing to be in compliance with the Texas law.
A complete 48-page sample package of all of the required disclosures will be provided.
This is not an 'overview' presentation. This course will discuss specifically what disclosures must be provided to your borrower, in what time frame, and what information is needed. It will also cover serious mistakes that many investors make in the seller financing process - mistakes that could make them vulnerable to serious and expensive legal action!
In addition, this course will update you on the pending legislation in this area, and how it could affect how you conduct your seller-financing in the future.
Whether you use an RMLO, or do it all yourself, it is very important for you to understand the process and know what is required legally. It's your pocket book at stake!
Mindy Henderson was one of the panelists who spoke at our July General Meeting. She owns 27 rentals, and property manages another 30 properties for clients. She really enjoys doing the big rehab projects (back to the studs). Until recently, she was buying a house every 6 weeks, rehabbing it and then holding it as rental property. However, that business has slowed down considerably, due to lack of financing at the bank. Almost everything she does is buy and hold for rental.
For the last 18 months she has spent most of her time managing rental properties for other investors, and doing loan disclosures for seller financing, as a licensed RMLO. She recently completed her first full audit by the Texas Department of Savings and Mortgage Lending, and got a very good score.
Mindy also has her Real Estate Brokers license. She has negotiated short sales for investor clients, listed (and sold) some REO's for a local bank, and listed (and sold) properties for private sellers and real estate investors.
If you heard Mindy speak at the July meeting, you know that she is very knowledgeable, very precise, and very organized - which will make for a very informative presentation.
Educational Seminar:
Tuesday, September 27
7:00 - 9:00 p.m.
Location:
I don't know. I've spoken to Grant Kemp, but decided to do rentals because of Dodd Frank. And ended up renting travel trailers rather than MHs.
A resource for REI in Texas is
http://lonestarlandlaw.com/doddf.html
Wraps, sub2, lease options, Asset protection, etc.
An attorney's website.
I love this...
http://lonestarlandlaw.com/Right-of-First.html
Better than a lease w option
Hey Brian, I can tell you who isn't the best RMLO in Texas!
Probably a much better decision Leslie! :)