Do I need a Mobile Home Dealership License?

Question

I just started reading Lonnie Scruggs book 'Deals on Wheels' on buying/selling and financing used mobile homes. I was attracted to the used mobile home market because of the low cost of entry and the fact that I don't really want to be a landlord.

However, just ran into a small problem. Mr. Scruggs seems to suggest that you need to have a Mobile Home Dealer's License to do this. This will require a $35K 'surety bond' in my state.

Well, I don't have 35K that I can just let sit in escrow...

Anyone know more about this issue?

Andriy Boychuk · Answer

@Philip Lamachio  thank you for sharing the information.

@Ken Rishel  is on this forum as well.

Philip Lamachio · Answer

Thanks John, yes, I went to John Fedro's site and found that page.

I think I have a workaround....Virginia allows 5 per year w/out a license, and SC allows 4. My state allows 3.

I don't see any reason I cannot buy and sell in Virginia or SC as well....that would give me 12 mobile homes I could buy/sell/finance in a year.

In approx. two years time or less, I should easily be able to have the 35K for a surety bond assuming $200/mo. per note cashflow and holding 12 - 18  notes.

Philip Lamachio · Answer

@Bill Neves

The latest edition of Deals on Wheels has a chapter on Dodd Frank and the Safe Act.

Also, just contacted Ken Rishel of Rishel Consulting Group (via John Fedro) about requirements vis a vis compliance and legally seller financing in light of the new regulations. They consult and offer solutions (education and legal forms, compliance procedures/manuals, etc) for small retailers, and I expect I will proceed with them.

Ken also explained the bond issue, but thanks for explaining that anyway....it had me sort of stumped for a second.

@Andriy Boychuk Yes, I will do the three deals and see. I know that I don't want to be a landlord....have seen my parents do that. And the amount of return on Lonnie deals are so much better, with so much less invested.

Andriy Boychuk · Answer

@Philip Lamachio  I highly recommend to start your business and do as many deals as the state allows you to do without the license. You need to make sure if you like the business.

Bill Neves · Answer

@Philip Lamachio

We love mobile homes. Great business.

Caution about Lonnie's method. The new Dodd Frank rules kicked in about the time Lonnie passed away. You cannot just make notes to finance, like we used to.

Also a bond won't cost you $35k. You can get coverage from insurance agents which is usually 10% or less depending on your credit.

Yell if you have any other questions.

Good luck and have fun!

John Duffy · Answer

The short answer to your question is yes, at some point you will need a license to sell mobile homes.  Check out this link for more detail:

http://www.mobilehomeinvesting.net/mobile-home-license-per-state-how-many-can-you-buysell-per-12-month-period/

I would suggest that you FIRST, do the max amount of buy/sells that your state allows in a given year and only THEN, consider getting licensed.

Do I need a Mobile Home Dealership License?

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