Broomfield, CO · Member since 2012 · 47 posts · 43 votes
I'm a moderately experienced single family home investor who currently does wholesaling, rent to own, and and fix n flip investing. With the current SFH market booming again I'd like to get into a new market with lower future risks - mobile homes.
Do you know of a good way to learn about this market? Are there particular books you recommend?
Coming from SFH's I'd be interested to know the differences between mobile home investing and SFH's.
Buy Lonnie Scruggs books: Deals on Wheels and Making Money w Mobile Homes. This will give you more than the basics of how to work with the sellers, buyers, parks, etc. Welcome to the wonderful world of Wheelestate!!!
Buy Lonnie Scruggs books: Deals on Wheels and Making Money w Mobile Homes. This will give you more than the basics of how to work with the sellers, buyers, parks, etc. Welcome to the wonderful world of Wheelestate!!!
Marc Faulkner hit it on the head with Lonnie's books. They are all great and will give you a great introduction and groundwork for what you will experience in this business.
I also suggest networking with the local mobile home brokers, park owners and contacting your states Manufactured Housing Association. Go drive through all of the parks (drive the speed bumps) within X radius of where you plan to start working to get the lay of the land.
Thanks for the recommendations! I just picked up Lonnie's two books and will look into the MHP book too. The deals on wheels read is quick and easy - on page 80 of 220 and bought it today.
I'll checkout the local rei club mobile home experts.
You might consider buying a mobile home park! I owned several SF homes and when the last cycle peaked, sold and 1031 exchanged into mobile home parks here in California. The initial returns were average but I increased rents, reduced expenses and created a very steady and low risk source of monthly income.
You might consider buying a mobile home park! I owned several SF homes and when the last cycle peaked, sold and 1031 exchanged into mobile home parks here in California. The initial returns were average but I increased rents, reduced expenses and created a very steady and low risk source of monthly income.
Thanks John!
I am very much interested in mobile home parks but know little about them. I purchased Lonnie Scruggs first two books and enjoyed reading them. Dan suggested that I read 'Dealmakers Guide' that will be the next read.
Any tips or suggestions for getting into mobile home parks? Do you recommend doing a couple mobile home deals as a requisite?
What are typical MHP returns like?
It can't hurt to do a couple of mobile deals! To learn more about MHPs, visit LoopNet.com, find a couple of 20-60 space parks in your area, ask the broker for the package and drive by. mobilehomeparkstore.com is a great place to learn more about all things manufactured housing.
Scott, I've been a huge fan of Lonnie Scruggs. He is really good with MHs in parks and seller financing. The caveats are that newer regulations really limit what you can do with seller financing, and some of Scrugg's content is dated. I'd still recommend his books, though.
Take a look at John Fedro's website in his signature above. He's got a lot of current experience and content.
Deals on Wheels is excellent as a starting point. Making Money With Mobile Homes will make much more sense after you've done a few deals and have gained the experience. Hope that helps!
Tony Collela's Investing in Mobile Homes with Land is another good one that doesn't get mentioned too often. I bought my copy off of Creonline.com a year or so ago but not sure if it's still available.
Tony Collela's Investing in Mobile Homes with Land is another good one that doesn't get mentioned too often. I bought my copy off of Creonline.com a year or so ago but not sure if it's still available.
I've read Tony's book too, It is worth your time. He's got a good amount of info on how to do repairs and maintain MH's from the investor perspective.
The first book I read was Mobile Home Wealth by Zalman Velvel. I like it. It is simmiliar to Deals on Wheels but Zalman covers mobile home rentals and lease with option to buy.
If you are interested in investing in mobile homes, then Lonnie's book is fine. If you are interested in mobile home park investing, then there's a ton of articles, books and courses on MobileHomeUniversity.com.
Scott, Jon only alluded to "Dodd Frank" which in many experts view here on BP outlawed deals on wheels owner financing. I don't think there there are any current sources of how to buy for $3k and sell for $9k at 16% interest way of doing the traditional lonny deal and be in compliance with Dodd Frank. This math is specifically mentioned in Dodd Frank and is now a past business model. Long term lease option is also mentioned in Dodd Frank and all of the other possible work arounds.
There are ALOT of folks still doing this and a MHP broker just last week told me that parks owner finance their MHs. This aspect of Dodd Frank phased in just this past Jan 2014. They will not get in trouble till some borrower calls the state banking regulators or a MHP competitor calls the state regulators to give you grief. I've heard on BP mobile home parks getting whacked for owner financing MHs to buyers without a mortgage originators license etc. Just saying that actually doing lonnie deals (today) is like speeding on an interstate. We all speed and we all know that some day we may get a $200 ticket. Just putting this out there. I hear the ticket re Dodd Frank can be loss of 36 months of interest or loss of your equity (borrower gets the MH free and clear). There is a possibility of fines if it looks like you where predatory and I'm not aware of an exact definition. Dodd Frank gives the borrower incentive to call the regulators on you. This is new for Fed regulations!
I'm just the messenger wanting you to be more fully aware.
Search here for "has dodd frank outlawed lonnie deals" or similar.
My view is that it's best to buy the park. We are in a few year window with alot of smaller park owners retiring and owner financing 70% of the park to the buyer. We should jump on the park side and then use a 3rd party Mortgage Loan Originator to sell the MHs within the park.
So far I've not read where doing Lonnie deals through a Mortgage Loan Originator makes you compliant. Dodd Frank has a problem with high interest loans and we are in the very early years of clarification and enforcement.
It seems that a lot of people think the only way to invest in mobile homes is through "Lonnie Deals", but the "Mobile Home Wealth" book mentioned earlier covers making money through flipping and rentals. I think Tony Collela's book goes into a lot about rentals (haven't read it yet -correct me if I'm wrong.)
I'm changing my MO so to speak, I'm not chasing gurus around on this site or correcting bad information every time someone open's their mouth. Or, even implications that not complying with real estate finance laws is similar to a speeding ticket, fines can be 100K and/or 10 years, administratively they can put you out of business without ever taking you to court.
If people want to get what they want to hear in public forums, take advice from college drop outs, marketing guys in areas of finance and RE law, well, it's a free country.
If I ever made a podcast, it would be moving at a much faster pace, there would be no chatting, joking, time killing antics, I just have time for such things. If I did one it would be in a lecture style, questions asked, much like a college classroom, bam, information put out, to the point and issues, probably very boring for those needing motivation and inspiration, LOL, you need that before you get to my class..... :)
PS. I've done MHs, not really a thrilling aspect of RE to me, in fact I don't even consider MHs as RE unless tied to land. I'd rather have a car lot, less stress, fewer regulation, money can be the same or better, inventory is easy to find and it turns faster, but that's just me. :)
If you are looking to carry paper on a few mobile home notes, learning the intricacies of your state's laws and registering to be compliant is probably not top of mind. However, investors / private lenders not adhering to the SAFE Act or Dodd Frank are indeed exposed to possible fines and penalties, which may wipe out years of profit.
Of course, the intent of these laws was not to target small private holders of mobile home notes. Nonetheless, if you're not in compliance with the letter of the law on this issue, you'll be adding additional risk to your investment.
We are not fond of unmitigated risk and wish to protect our investors' capital.
Therefore, the way we address this issue is through a rent credit program, which was first started by Sun Communities (large manufactured housing REIT). It resembles a lease to own program, but instead of paying down principal, the renter builds up credits, which can be used to purchase any available home in the Park.
The differentiating feature here is that the credits are not specific to the home they currently reside in.
Although it is indeed a rental, the tenant is building "equity" (credits) and has consequently....demonstrates pride of ownership and takes care of most minor repair issues on their own. The Park takes care of larger repair issues, which helps protect the value of the asset.
I will comment to that as it is a unique arrangement not mentioned before.
It's a pre-arranged installment sale. Since no security interest in any one property is not taken it isn't deemed as transaction financed at that time, however, state laws differ and when a financing contract reaches some conclusion or it ultimately employed as a credit toward a property lowering a fair market value you can then have a violation.
The SAFE Act, again, applies to ANY scheme or method employed to circumvent the intent of the law. ANY scheme will be in the eye of the beholding regulator, the intent there is a financing arrangement to pre-pay toward a purchase price. Clearly is not a secured real estate financing agreement, it is a scheme that effects the same out come.
Pre-financing schemes are not new, if any financing or installment payment provides the right to purchase an asset in the future such will still be seen as an installment sale.
Another comment in anticipation of future comments; attorneys are certainly trained to look to intent of laws, they are also trained in seeking loopholes, technical aspects that provide some other door to evade capture. They are also trained in courtroom environments. While the also are trained in administrative law issues, few actually deal in administrative actions which can be rather imposing and not being a court matter, orders by agencies and fines imposed are final, it's after the fact that your attorney then requests a hearing or court action. Other rules may apply. So, as to attorneys attempting to find loopholes or these open doors, their approach may not recognize the powers of federal agencies thinking they may be facing a circuit court or federal court prosecutor, that may not be the case.
Point is, running down to a real estate attorney not versed in HUD regulatory authority (or other agencies) may not fly as initially expected. I've been there when some bank attorneys were rather surprised at their limitations in fighting administrative sanctions.
The way to avoid issues with Dodd-Frank and the SAFE Act are pretty simple, comply if they apply. Thinking you are innocent until proven guilty is not the approach to take in administrative actions, if you are accused you're already guilty or you wouldn't be getting hammered with cease and desist orders and told to appear for your hand slapping. It's not really like going to court and found not guilty, you go and are found to maybe be less guilty. I've never heard of any sanction where an agency said, okay, you're right, go back and you can continue what you were doing.
Lastly, does anyone have stats on how many RE attorneys are sued by their clients and indemnified for losses arising from their advice? I'm sure there are cases, I'd just think it would be very rare, especially in smaller RE deals. After a client looses I'd think the usual course of action is to simply fire that attorney. Attorneys are very good at not biting off more than they want to chew, at least good ones. Just food for thought.
It is a shame everyone think they know how the DF will affect doing deals but law makers, lawyers don't have a clue about the law. Misinformation from people thinking they know everything will hurt more then anything.
The great thing about BP is others sharing their personal experience. I enjoy the dialogue..What works for one might not work for another, but at the end of the day the information is good!...No 2 markets the same....keep it moving!!