Rockford,IL Mobile Home Investing??

Question

Hello.. Anybody doing any MH investing a.k.a "Lonnie Deals" in the Rockford,IL area?? I have been a landlord for about 8yrs with SFH's I would like to get started in MH investing just want to get some good info...Thanks!

Collier H. · Answer

Thank's again Ken for all the info. I will keep all this in mind before I do any deal...

Ken Rishel · Answer

There are no laws against owner financing in Illinois. However there are laws governing owner financing. From a licensing point of view you will need two licenses, the MLO and a consumer lending license for the company.

The exception to that rule is if you are financing a home that you actually lived in for two years or more and it was your declared primary residence on your income tax forms.

Even with the licenses go a plethora of compliance issues from Red Flag to Debt Collection practices, and everything in between. Things have changed considerably since Lonnie wrote his book, and Lonnie Dealers all over the country are struggling to either band together to form finance companies in some states, to hiring outside firms to originate loans for them in others. (Not legal in Illinois and six other states - impractical in 10 others.)

Solutions are out there, but they are complex and require training and education to utilize. Of course, the larger you are, the better the solutions.

Expect first year start up costs to run about $10,000.00 in Illinois to get all the licenses and satisfy all the requirements. The second year should run about $4,000.00.

Other solutions, while not as clear cut, and not as profitable, could run as little as $2,500.00 in start up costs, with no real ongoing costs to speak of, and is probably the only practical strategy for a smaller operator.

Collier H. · Answer

Thank's Ken... Great info!..One question, is there laws in IL against owner financing on MH?? I see owner financing deals here on houses all the time. Any light you can shed on this would be very helpful...Thanks!

Ken Rishel · Answer

Collier - A company I own finances manufactured homes in Illinois. I'm sorry for the other poster's experience at Four Seasons, but our experience is very much the opposite. The very, very, few repos we get there we almost always get 100% recovery. All of that said, that community is pretty much a four star community and they likely wouldn't be very interested in Lonnie Deals, and same could also be said of the other community in the same town (not Rockford).

There are two other large communities North of Rockford that also would not be friendly to Lonnie Deals, but there are others that would. Ownership of the the large one near the airport is cloudy but you might be able to make a deal there. You might find the smaller communities are much more receptive, especially if they aren't over 80% full.

Northwestern Illinois has traditionally been a good market for Lonnie Dealers as there are absolutely no street dealers in that part of the state, and smaller communities do not have strong sales programs to control their infill needs. It is also a stable market, so repossessions are less common than elsewhere in the state.

Your biggest problem will be the lending laws in the state of Illinois, but that is another story.

Collier H. · Answer

Sorry... You took such a big hit in that deal. If I may ask what did you pay for her MH here?? Because, I will only be doing deals at 3k or less. There seems to be plenty of MH's for sale around here in that price range. But, I'm guessing the MH you bought was much nicer and you paid much more then 3k for it??

Ed O. · Answer

No, not an investor up there. I used to live in McHenry County tho. I bought a mobile for my mom some 5 years ago and then had to sell it after she passed away (2 years later). I lost my tail on the deal. The market went down and I got clobbered by the carrying costs. I then had to pay a 12% commission (to get a cash buyer). Things move a lot slower when it's cold and I got stuck carrying it through a lot of the winter and had to keep dropping the price, as the holding costs ate me alive. I think mobile home flipping can be done in the right spots, but that place, it could never be done. I lost probably 75% of what I paid for the home. While it wasn't purchased as an investment, it still stung.

Collier H. · Answer

Thanks for the info ED... Are you an investor here in Rockford?? Have you done any MH deals here or in the area??

Ed O. · Answer

Avoid the Four Seasons Mobile Home Park. My mom had a home there. The lot rent was 450-500 PER month, no discount while it sat empty. They also fine the crap out of everyone they can like crazy. Tons of restrictions that would make it difficult to make any money as well. Very poor management staff too. I lost a Truck load of money when we had to sell.

Collier H. · Answer

Hello Darcy... I plan on buying lonnies book very soon. I was just wanting more of a local view of the MH market in my area. I have been going to local MH parks to get a feel for it, and see whats for sale...Thanks!

Darcy S. · Answer

Collier,
I would highly suggest purchasing Lonnie Scruggs' book "Deals on Wheels". It will have basically everything you need to know about doing a "Lonnie Deal".  http://www.lonniescruggs.net/store

Good luck!
Darcy