Trailer park does not allow Rentals?!?!?!

16 Replies

So i purchased a mobile home that was already in a park, the person i bought it from was currently renting the property but after the last tenant left she decided to sell. I have worked on the property for a month now and finally met with the park owner to sign lease and set up autodraft for lot rent. During our conversation he asked me if i was going to be living there and I told him no, I am renting the trailer. He immediately said NOPE, we dont allow rentals, everyone here owns or their family owns the houses.

So now I have a problem, what the heck do I do with this house? There are several more for sell in adjacent parks and im afraid i will not be able to sell it. 

Im thinking about owner finance maybe, any suggestions? 

First attempt to work with the property owner suggesting they have guaranteed rent whether the home is occupied or not.  If that doesn't work offer to sell the home to the owner for a very small profit if any, cut your losses and move on.  If those fail then look to sell the home at the same time see if there is an investor friendly park nearby that will allow you to move the home there.  This will can possibly add a few thousand to the total cost. Don't even bother with owner financing, you suggesting it indicates you haven't done your research on it.  At the end it's a lesson learned and your best bet is to minimize your losses.

Throw yourself at the mercy of the "court" (park manager). I like the idea of working with the park manager and appealing to his softer side. See if he would consider allowing you to do a lease option... given your unplanned situation. After all, you said it was previously a rental. You could then find an end buyer and after a couple years deed the home to them if they meet the rest of your lease agreement.

I think moving it to another park would be a problem. Many parks don't want older homes (you didn't say the age of yours) and it will probably cost you another $5,000 to move.

Worst case, put it for sale, cut your losses and chock it up to your education costs.

@Jack Reed

Sell it to a Retail buyer, but be the Lienholder...

That way the park owner gets an owner occupant, you get a retail price plus interest over say 18 - 24 months and a retail buyer gets financing on a used mobile home which is very hard to find!  If they don't pay their note GREAT take the mobile home back and sell it again with a note.

Ever Read "Deals on Wheels" by Lonnie Scruggs?   That's his niche market!  He would be fighting tooth to toenail to get in just the position that your in!

BTW he finances these small notes at 12% :D

Good Luck

Jack I see your new here.  So I'll save the "you should have searched here on Lonnie deals" and seen that buying MHs in parks is not a good idea.  As you've found out.

My view:  The park manager has NO reason to bend the rules and allow a lease / option.  Because he knows Jack is over a barrel, as are all other sellers in all parks, rental or lot rent only parks.  Because park owners / managers have a decent little business being predatory picking up free homes from folks who are forced to just walk.  Just like buzzards sitting on the cactus waiting for something to drop dead, park owners just wait for stress to peak and folks walk.  Since Dodd Frank killed off investors doing what Jack though he was going to do,  rising debt held by park owners forcing them to dig deeper for revenue ideas, the poor MH owner has been screwed by the Gov via Dodd Frank, then by the park owners.  

It will be a miracle if the manager lets you lease / option that home.  They are waiting for problems like yours!

Put it in craigslist for what you paid, mean time you are on the hook for lot rent.  The park won't approve your buyer if there is outstanding on the lot rent.  Your other choice is to just walk and call it tuition.  :)   I've paid MUCH higher tuition so your few K is not bad really.  

Curt Smith, Sweetgum Properties | [email protected] | 678‑948‑7151 | http://GaREIA.com

@Jeff V. You have heard of Lonnie Scrugs, but have you heard of Dodd Frank?  

What you tipped is now illegal for non-licenced as a bank, to do.  For practical purposes, it's illegal to finance to a mobile home buyer who will occupy.  

The park manager still has to approve the buyer.  Stories like this one, included the park taking months to finally disapprove.

Curt Smith, Sweetgum Properties | [email protected] | 678‑948‑7151 | http://GaREIA.com

Yes, I am new and apparently didn't do enough research. I assumed since it was a rental when I bought it I could rent it as well. This being my first deal I'm a but discouraged.

Thank you all for the suggestions. Working with park owner is out, I tried to go that route when he informed me of their no rental policy, he's not a very understanding guy. Moving the trailer is to expensive and would cost more than trailer, I paid 4k for it and have put 2k into rehab. It was going to be a sweet deal rented at $600 a month, already had a tenant waiting to move in. 

At this juncture I think selling is my only option. There are 3 trailers in same area, different park, that are fir sake and have been fir a while. This concerns me about mine selling. 

One avenue to check out is to find a Chattel Lender in your area or state. One that is licensed and doing Dodd-Frank type of lending. If your tenant was able to afford 600/month than there is a good chance they could qualify especially if you keep the price near your cost.

While Lonnie Deals are not dead, the format for financing a home has drastically changed.

Our consultancy just did a workshop in Chicago about a month ago for Lonnie Dealers on how they could continue to do Lonnie Deals legally. In relation to your original post, I think it is significant that we spent considerable time educating Lonnie Dealers on how to develop working relationships with community owners.

Community owners are like everyone else. They have their own goals and they have their own prejudices, and both the goals and prejudices will be different for different operators. It isn't very likely 4 and 5 star community owners are going to welcome Lonnie Dealers, but others might roll out the red carpet if they feel it is beneficial to them.

As Curt Smith penned, your biggest mistake was not learning what you don't know before committing investment monies. It is easy to see why a community owner wouldn't want to work with you, but it is also fixable when you have the knowledge. Good Luck.

It's difficult to "know" everything when starting. Ive seen on here many times educate yourself which I did the best of my ability and until it was mentioned here, I had never heard of dod  frank or Lonnie deals. Being "uneducated" in this area that I did not know existed has apparently created a very hard lesson learned for a new investor. I think this might be my first and last deal because I didn't have that much to invest to begin with. I appreciate all the advice. 

@Jack Reed

Everyone on BP is here to help and to be helped.  I feel safe saying everyone here feels for your situation!  I am sorry you're in a bind!

The mechanics to salvage some capital is all above.  I have no more ideas.  Ken offered that you hunt up a lender on MHs and see if your home qualifies as lendable.   Here's 2 shops I know of to call:

https://www.vmf.com/

https://www.21stmortgage.com/web/21stSite.nsf/inde...

I just googled:  mobile home financing

Ok to your REI career that needs a jump start. I feel that the lowest cash easiest deal type is buying nicer homes on a lease and an option and either selling on a lease and an option or assigning the option to the tenant (wholesaling). The cash needed can be low, a few $100 for marketing, alot of leads are in craigslist.org under for sale by owner, just free to call. I suggest you do some BP learning on:

- direct marketing

- lease options 

- wholesaling lease options

I'll be honest, the difficulties and skills needed are: 

- being able to negotiate with sellers, going into sellers homes and negotiating a sale face to face.

- marketing for leads.  This is its own skill and possible cost area.

What if this doesn't work for you?

- you'll hopefully talked to a few sellers and started to learn the art of negotiation and being face to face with sellers.  This has it's own value even if nothing comes of this.

- you'll have seen a chunk of creative finance deal types that you may not know about yet.

- Education is always good, even if it leads no where.  It's a stepping stone process.

good luck.

@Brian Gibbons

Curt Smith, Sweetgum Properties | [email protected] | 678‑948‑7151 | http://GaREIA.com

Thanks @Curt Smith

@Jack Reed

The business of Real Estate Investing when you start is know the basics, which BiggerPockets has amazing resources

First understand that Sellers just want to solve a problem and the more tools you have to solve their problem the better you can make some money 

Also in my opinion wholesaling only works for houses that need a lot of work. If you find a house that needs 10% of FM value of work, it's not also going to be a wholesaling deal

Find expired listings and go talk to the sellers face-to-face. I go through marketing low equity deals if you search "Brian Gibbons Quick start  fast start"

If you want respect from attorneys especially probate attorneys, get a real estate license

You can act as a principal in contracts as long as you get on title. You can get on title on a land contract or a subject to contract or installment sales contract

When you assign a deal whether it be a lease with option or option to purchase or sale and purchase agreement; you are in gray area of selling the paperwork and not selling the property

With credit being tight, if you do a lot of the assigning of paperwork, you're going to get pissed off real estate brokers complaining to the real estate board about your activities. Why should you care about that? That's a black blemish on your your security number. Let's say you got a cease-and-desist letter from the department of real estate in Oklahoma, and then you go get your license, and other department real estate says what we can't trust you

You are better off getting your license and disclosing to the seller that you were not acting as an agent but acting as a principal buyer

One the best rental markets is Oklahoma City. Buying on terms and renting out would be a great way to get started

I coach 1 on 1 but brand-new people is really hard

I think your best bet is to hang out at REIA's, get licensed, do joint ventures with people, and learn from experienced people

Good luck

Medium banner reiskills 997   copyBrian Gibbons, REISkills | [email protected] | 818‑400‑3046 | http://MyREISkills.com

Lonnie deals are not dead, but Lonnie is.

Hence, @Jeff V. Lonnie is working smarter, not harder, nor lending (much).

To the OP: One way or another, you're going to get an education. 

Cut your losses and move on. Lick your wounds and count your blessings. Any problem you can write a check to fix is not a real problem. 

To be compliant with the Dodd-Frank "Safe Act" an owner-finance deal simply needs to be run through an RMLO. The rule states that a small number of deals can be done before needing to do so. Nonetheless, I would go ahead and use an RMLO to gain the experience, make a valuable partner contact and to be sure that my deal was 100% solid. In this area RMLO service runs between $250-$400 per deal.

Originally posted by @Jarrod Weaver :

To be compliant with the Dodd-Frank "Safe Act" an owner-finance deal simply needs to be run through an RMLO. The rule states that a small number of deals can be done before needing to do so. Nonetheless, I would go ahead and use an RMLO to gain the experience, make a valuable partner contact and to be sure that my deal was 100% solid. In this area RMLO service runs between $250-$400 per deal.

 With all due respect, I strongly disagree with this advice. There have been numerous posts as to why this is not longer a workable strategy so my suggestion is to find them here on BP and read them to understand why it is no longer workable.

As a side note, who would charge only $250-$400 per deal? Even before the laws changed making this impractical every reputable originator was charging at least $600, and most were at $750.00. Now the knowledgeable and reputable are not doing them for any price.

Originally posted by @Ken Rishel:
Originally posted by @Jarrod Weaver:

 Now the knowledgeable and reputable are not doing them for any price.

This statement is a bit of an oversimplification. I wrote it because so many people are so far off base on the proper methodology that, for the most part, is true. 

There are complex methods involving a very specific contractual arrangement that can work, but if they don't include such things as operational agreements, commercial facilities agreements, trust accounts, escrow accounts, master title agreements, and full licensure as required by state and federal law as residential lenders and servicers, whatever is being done is not going to withstand any scrutiny. 

A MLO working for a mortgage broker cannot legally originate a loan for someone else. A MLO cannot originate a loan for themselves and then "sell it to a third party" for ownership and service unless that third party is also licensed to service those loans.

This topic is far to complex to lay out in BP. Anyone wanting to do this either needs to hire a qualified law firm or a specialized consulting firm to help them with this. Be prepared to invest considerable money and time in getting it up and running correctly.

Try and reach out to other Parks, depending on the year and condition you may be able to find someone to assist in the moving costs.  I provide monetary incentives to investors to move their homes into my park.  That would at least help defer the moving expense and mitigate your losses and provide you with your end goal of rental income.  If that doesn't work offer to sell the home to parks that have multiple vacant pads, you should be able to get close to what you paid and let them worry about moving it.