Journey through the next (Lonnie) deal..

Journey through the next (Lonnie) deal..

Real Estate Investor · Member since 2009 · 260 posts · 119 votes

Before I did my first deal, I spent time on BP searching for people like me going through their first dealings in this business. I found many who started sharing their adventure but when it started to get good, the thread died. The ones that did finish I found to be extremely helpful. They show how easy this business really is to get out there and get started!

My first post on the subject started out looking for answers and ended being a journal of my personal findings along with tons of valuable information from many great people on Bigger Pockets (Thanks to all of you!). That thread can be found here for those interested in reading along: http://www.biggerpockets.com/forums/30/topics/45339-first-lonnie-deal-on-the-right-track-

I have received a huge amount of support from people who are testing the waters with their toe but have yet to jump in for fear of the un-known. One of the most common things I see concerning a 'Lonnie deal' is "I can't get homes that cheap!". Well to that I say non-sense, poopy pants! You CAN. You just have to find sellers who NEED to sell. There is a big difference between a seller who wants to sell, and one who needs to sell.

With that being said, here we go!

This deal I just bought a few days ago started with a simple phone call I received one night about 8pm. It was from a gentleman who got my number from the neighbor of my first deal (you won't believe how fast word of mouth travels in these small communities!).

He said that he heard I buy mobile homes. I explained that I buy mobile homes if the numbers work and it makes sense to buy them. I always ask them to tell me about the home and let them talk. While they're talking you are learning about the home, why they need to sell, and building report all at the same time. It turns out that he needs to sell because he is moving out of state in less than two weeks to live closer to the children and grandchildren. On top of that, his wife has had a job offer that she needs to take advantage off (sounds like they NEED to sell doesn't it?).

After I kept him talking a little bit, asking basic questions about year, size, bed/bath, the AC, roof, ect. I asked him about the condition/repairs needed to the home. Just keep them talking! He told me the floors were in pretty bad shape. When I asked how much he wants for the home he told me $1000. Now that's within my price range so I told him I would be there in the beginning of the week to take a look.

Let me take a step back for a moment and mention something. This is a people business! If someone doesn't like or trust you , you probably won't get the deal, or at least not a very good one. It's very important to build report!

When I got there we talked for about 15 or 20 minutes about everyone's favorite subject.. you guessed it. Themselves! We talked about his business, the horribly hot South Florida weather, and the miserable people down here. Then we talked about how great North Carolina is how how he can't wait to get out of here. While we were talking I casually did my inspection. When I found a problem, I didn't have to say anything because he was right there.

During the inspection, I found water damage (not bad) on the wall around the window AC. Plywood over the holes in the floor (they were big enough your foot would go right through to the grass). The place was going to need to be re-carpeted.

After I was done I explained my concerns about the home. My main concern is that the place needed to be re-floored/re-carpeted and there is a very limited market for a 2/1 without central air, and aluminum wiring which means my holding cost + repair cost + sales price puts me above retail value and leaves me with very little if any profit on the deal and that's why I typically stay away from 2 bedrooms unless they have something to offer like central AC or 2 bathrooms.

Then he asked me if I would take it for $400 if he paid the next months lot rent. Can you believe it? I didn't make an offer or have to 'low ball' him. He did it himself!

Now.. this is where MY lesson was learned (that's right, I'm still learning as I go and have lots to go). I told him I would definitely consider it at that price but I wanted to put some numbers together first. That night I went home, put my numbers together and I was pumped! Then I started to get a bad feeling about not closing the deal. Sure enough, first thing the next morning he called me to tell me he had SOLD IT pending park approval for the full price $1,000 CASH.

Talk about a kick in the ribs and ruining my Saturday!!

Well.. I know this post is long enough to make your eyes bleed so I will end it for now with a 'To be continued...'

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Real Estate Investor · Salem, OR · Member since 2011 · 422 posts · 149 votes
15y

Nothing short of Inspirational.

See this reply in the discussion

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  • Real Estate Investor · Member since 2009 · 260 posts · 119 votes
    16y

    I, like many of you am a visual person. So here are some pics to keep you interested :wink:





  • Investor · Morgantown, WV · Member since 2008 · 207 posts · 33 votes
    16y

    have you checked some of the Fla. Deals on Ebay? Seems like a lot of homes under 3k.
    You may have saved yourself some headaches? 1 to 2 mos of doing repairs- additional 1500 plus park rent. Also, aluminum wire not as safe.

  • Real Estate Investor · Member since 2009 · 260 posts · 119 votes
    16y

    Yes but nothing close by. This is home is actually a minor rehab. I've got a quote of $250 for labor, have materials priced out, and the carpet guy budgeted in. Lot rent will be prorated to the new buyer. Total out of pocket should be a little less than $1500 but if it did get close to 2k it is still a pretty good return for 3 days worth of work (2 days for handyman, 1 day for carpet guy.

    Of course we won't know for sure until it's sold but I know what some of the other homes in the park have sold for needing way more repairs so I feel pretty good about this one.

  • San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    16y

    Awesome, Terry! The pics are great, thanks for sharing your story and journey - that's what it's all about!

    p.s. Just curious, is this a 14x70? Is that the target size of most of them? Thanks for sharing!

  • Real Estate Investor · Member since 2009 · 260 posts · 119 votes
    16y
    Originally posted by Rachel H.:
    Awesome, Terry! The pics are great, thanks for sharing your story and journey - that's what it's all about!

    p.s. Just curious, is this a 14x70? Is that the target size of most of them? Thanks for sharing!



    In this park, standard seems to be 2/1 12x60 1970's. Which I'm not crazy about but the sellers are calling me and their motivated. I just bought another MH yesterday across the street for $500! It's furnished with central air, new roof, carport. How wrong can you be? For that one the husband was gone for the day so I wrote up a contract and signed it, along with a check for $500 made out to him and gave both to the park manager. Then I told him that there was a check waiting for him, all he had to do is sign his name and the title over.

    To make things even better, I found out this morning that lot rent has been paid until June!

    In case anyone reading is wondering, this one I'll list for $4,500 and sell AS IS with no work done to it.

  • Real Estate Investor · Member since 2009 · 260 posts · 119 votes
    16y

    **UPDATE**

    Well I called the park manager and told her the situation with the seller/other buyer and asked her to let me know what came of it. She called me a few days later and told me that the couple were denied so I called the seller and followed up. He dropped the price from $1000 down to 500 so told him I could give him $300 and he can focus on moving instead of selling and have one less thing to deal with. We agreed on $350.

    This weekend the handyman will be making the repairs and I will keep you posted on repairs/expenses as it plays out!

  • San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    16y

    Thanks,Terry! I was just wondering on the sizes that you target. It's amazing how you've been able to make these deals work, you're doing great! :D

  • Investor · Broomfield, CO · Member since 2010 · 187 posts · 54 votes
    16y

    Interesting story Terry. I guess I am just stubborn on the 2/1s. I only purchase 2/2, 3/1, 3/2 and up. 2/1s take forever to sell. But if you can make them work, that's great!

  • Real Estate Investor · Member since 2009 · 260 posts · 119 votes
    16y
    Originally posted by Reid Levy:
    Interesting story Terry. I guess I am just stubborn on the 2/1s. I only purchase 2/2, 3/1, 3/2 and up. 2/1s take forever to sell. But if you can make them work, that's great!



    I am curious to see how fast these move as well. I think these two I'm working on will be a good barometer of the 2/1 market..

    If you don't mind me asking, how much are you paying for the 3/2's in your area? What type of condition are they in and what's the lot rent ranging for those homes?

  • Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    16y

    Terry,

    you are doing great! Keep building on this priceless experience you are gaining. And keep posting about your learning.

  • Investor · Morgantown, WV · Member since 2008 · 207 posts · 33 votes
    16y

    Why only 4,500? The appliances are worth $500?
    I'm going to have to take back a 73 2/1 bath that I sold for 1k down, 7,500. I had good demand for it so I'll try again, maybe at 8k.

  • Investor · Morgantown, WV · Member since 2008 · 207 posts · 33 votes
    16y

    Terry, you could be pushing guru status if you say the guy threw the boat in also?

  • Real Estate Investor · Member since 2009 · 260 posts · 119 votes
    16y
    Originally posted by mountainjoepa:
    Why only 4,500? The appliances are worth $500?
    I'm going to have to take back a 73 2/1 bath that I sold for 1k down, 7,500. I had good demand for it so I'll try again, maybe at 8k.



    I like how you think, Joe! What's your avg holding time on a 2/1?

    I would love to get 7-8k for this home but I don't know yet if I would be out of line at that price in this park. What would something like this sell for in your area?

    Man.. now you've got me thinking real hard about $6,500!

  • Real Estate Investor · Near Houston, TX · Member since 2010 · 93 posts · 12 votes
    16y

    Congrats on getting more homes. I can't believe the prices. The only deals I can find remotely close to being that cheap have to be moved. I'm going to keep looking, though.

    Keep us posted on how things go.

  • Real Estate Investor · Near Houston, TX · Member since 2010 · 93 posts · 12 votes
    16y

    Edited to remove double post

  • Real Estate Investor · Member since 2009 · 260 posts · 119 votes
    16y
    Originally posted by Marilyn A.:
    Congrats on getting more homes. I can't believe the prices. The only deals I can find remotely close to being that cheap have to be moved. I'm going to keep looking, though.

    Keep us posted on how things go.


    The first deal seems to be the hardest to find, Marilyn. Don't be discouraged and definitely don't give up!
  • Real Estate Investor · Near Houston, TX · Member since 2010 · 93 posts · 12 votes
    16y

    How are things going, Terry? Anything to tell?

  • Real Estate Investor · Member since 2009 · 260 posts · 119 votes
    16y

    Well we finished the floor work over the weekend. It took a day and a half for us and the carpet guy was in and out today. She's patched, vinyled, carpeted, clean and ready to sell. Here are some pics of the floor that needed work. This were holes that we cut out . In fact I walked in the master bedroom to grab a tool and my foot went through the floor and right to the grass/dirt under the home.

    Entry way

    Master bedroom (this is where I went through the floor)

    Kitchen:

    UGLY kitchen vinyl

  • Real Estate Investor · Member since 2009 · 260 posts · 119 votes
    16y

    Out of pocket expenses:

    MH - $350
    Carpet+Install - $375
    KitchenVinyl - $125
    Vinyl Glue - $13
    Plywood - $111
    2x4's - $ 31
    Screws - $20
    Labor - $250

    Total cost: $1,275



    After pics tomorrow

  • Real Estate Investor · Member since 2009 · 260 posts · 119 votes
    16y

    This is the second home I was talking about. Purchase price was $500. Home has central air, furnished, new roof After the deal closed, I found out that there was a $500 credit for that lot! How wrong can you be for free?!



  • Real Estate Investor · Near Houston, TX · Member since 2010 · 93 posts · 12 votes
    16y

    Great progress! Thanks for keeping us posted.

  • San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    16y

    Awesome! Thanks for sharing Terry, you're on a roll! :D

  • Real Estate Investor · Member since 2009 · 260 posts · 119 votes
    16y



    Before:


    After:









  • Real Estate Investor · Near Houston, TX · Member since 2010 · 93 posts · 12 votes
    16y

    Hey Terry!
    Do you have any progress reports for us? Hope all is going well with these 2.

  • Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    16y

    Terry, I'm sure Lonnie would be proud of your work and your budget--great job!

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