I met with a real estate agent today to view a single family handyman special. During our chit chat, he expressed an interest in investing as well. The one topic that caught his attention during our conversation, was mobile home investing. He even suggested partnering up. It's not the first time I hear someone express an interest in "joining forces" to tackle mobile home investing. The idea actually does not sound bad, considering that it may actually open doors to actually taking action. My problem is that I am mostly familiar with the "Lonnie deals" type of investment. Using such a strategy may work well as an individual investor, but I don't see how it could be profitable in a partnership scenario. Maybe there is a way to make such a partnership work. I just don't see it. Perhaps there is a different way to invest, which allows for a profitable partnership to flourish. Any thoughts or suggestions would be greatly appreciated.
Yeah, its hard to say how that could work out. Obviously, if you do a rehab and cash sale you split the profits.
I guess two ways I might make it work would be:
1. Partner is my private money lender. Lends 10k amortized over x amount of years at 6-8% paid in full in 3-5. Partner does not do much in the deal while you deal with possible turn over of tenants, fixing up the place, marketing, etc.
2. Sell the note back to the partner. You find the deal, fix it up, find the buyer, make sure its performing etc. Say you sell the note and it cash flows $300/month for 10 years ($30,000). You sell it to them for a discount such as $18,000(60%). Hopefully, that is enough to have funded the deal and put you towards your next deal.
I've been playing around with how to do private money lending/partnering as well so its muddy waters for me as well.
Steven J., Will See Real Estate | 240‑394‑5733 | http://WillSeeRealEstate.com
Hi. One way I was able to start investing almost 20 years ago... was to partner with someone with money and I did the work. Initially, I did the work free as an intern to learn from a rehabber. Then found people to fund deals and I did all, a lot or most of the work.
One common split is 1/3 for funding, 1/3 for "project manager" - finding/selling, 1/3 for upgrades and repairs. So you can also bring in a contractor to do the work for a share. Money person for a share and you get a share for finding and selling the deal.
Even if the money person wants a 50/50 split, so what? A couple deals and you should have made enough to go on your own.
In regards to Mobile Homes and Lonnie Deals, sell them for cash or lease option, etc. And yes, you can do that in parks. Just have to have the right paperwork. Many deals in my area are all cash lately. That way you can do some initial deals and use someone else's money to get going. Then break out on your own and rock it.
Caveat: Make sure you are compliant with Dodd Frank and Safe Act rules. Read about that elsewhere on this blog.
Is there REALLY money to be made in junk mobile homes. I cant see how a $3,000 mobile home can be turned into a $12,000 mobile home for example. Tx. Roy
Well... @Roy D.
If you think of them as 'junk' you may want to stay with traditional stick built real estate.
However.... I take mobile homes that people may not want and turn them into good quality housing for people who cannot qualify for a traditional loan and don't want to rent. They love me.
I did 160 stick built real estate deals before my first mobile deal. I specialized in foreclosures and short sales before the market crash in 2008. I would get calls from my advertising and declined many mobile homes. I always heard 'they go down in value', 'stay away from them', 'trailer trash', 'if it came in on wheels it's a trailer', etc, etc.
Once I did my first mobile deal, my wife and I did 17 in 17 weeks and could not believe it. I was kicking myself for being so snobbish about them.
Now.... some of them needed work but have you ever seen a bad foreclosure or a house that has been empty for months or years? Kinda junk? An investor can take it, fix it up and make good money. I've done it and thousands of others have done it.
A mobile home is just inexpensive to obtain and can get better returns than stick built, in many cases. You don't need realtors, title companies, and a lot of the other traditional stick built necessities. In most cases, a mobile home is personal property like a car. Most even have a title, like a car.
Many of the deals sell for cash, just like a car.
I just completed my 30th deal 2 days ago. Have right at $20k in it and it's listed for $29,500. There is only one other mobile in the area under $30k right now. I expect to sell for full price. Financing is available with half down with a Dodd Frank compliant loan.
My 29th deal, just sold a month ago... I got for $10k, put $3500 in it and sold it for $24,900. Full price, cash, no discount. That was a profit of $11,500. And we did it in 28 days.
Do the math. ROI was over 1000% annualized. What stick built deal will do that?
Read some of the other mobile home postings here if you are interested.
So, short answer? Yes.... there REALLY is money to be made in junk mobile homes.
@Bill Neves - Awesome responses! Those who don't fully understand MH investing, are quick to be somewhat judgmental about such a niche. I happen to see it as quite a fascinating way to invest in RE. Prior to being bit by the REI bug, I had never heard of mobile home investing. I am still learning as much as I can, but my initial goal is to make quick money via buying/rehab. As a newbie, it's like being a kid in a candy store (without money! lol!). Once I have money to invest, I can then pursue MH investing.
@Roy D. - Bill pretty much answered your question.
If you have taken the time to question the validity of mobile home investing, then it sounds to me that there is some level of interest. I would say that a good person to listen to is John Fedro. He has an informative podcast on here...
He also has numerous Youtube videos.
Another good person is Jefferson Lilly. He deals primarily with MH parks, but also invests in mobile homes. He has a podcast as well...
Much like fear, we are all quick to judge on the things we don't know. If you are an investor, I would suggest researching MH investing. As the old cliche goes... "Knowledge is power". Once you learn more about it, then you can determine if it's something that will benefit your personal investment goals.
Thank you for your feed back. I'm still looking for my niche and am going in all directions chasing my tail so to say. Roy.
@Orlando Paz Try sending messages to members of bigger pockets.
This is my favorite part of the website.
@Mark Nolan - It's great to meet you. I am unclear about what you meant by sending messages to members. Just need some clarification.
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