Investor · San Antonio, TX · Member since 2016 · 90 posts · 28 votes
We do owner financing. We typically own a home, then find an end buyer and provide the financing.
I am trying something different and told someone to go find the house they want, and I’ll buy it for them at a discounted price, and seller finance them at market value.
The home they found is a nice mobile home in a community that charges lot rent. If he were to not pay the lot rent, would I still have first lien position on the home?
I think my way around this is to require it to be paid into escrow and the service company pay it, but I’m still curious if anyone has any experience with this.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
7y
@Larry H. I would not , however that is because I don't know much about mobile homes and parks. There are not many in my area.
However this is a common strategy. Lonnie Scruggs used to promote it. Sadly Lonnie has passed away. If you Google his name I am sure you will see more about the strategy.
Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
7y
Hmmm. But does that also make sense for the buyers? The whole idea of owner financing is that eventually they do get into an equity position, and it is a way to get out of being a life-long renter (for those that might not have a better alternative). That mobile home won't appreciate, it will only depreciate.
And why live in a mobile home park when you have the advantage of knowing Larry H and access to this crazy-good house buying program?
Specialist · Scottsdale, AZ · Member since 2014 · 626 posts · 700 votes
7y
@Larry H. @Larry H. If you finance a home in a park, and your buyer defaults, you will end up getting the home back, but you will also end up being responsible for the lot rent each month in the park. That’s not the end of the world if you understand mobile home values, you screen your buyer properly, they put enough money down, and they don’t damage the property significantly. You simply market the home and sell it again.
Keep in mind, mobile homes are titled as vehicles, so you’ll likely have to go through the process of repossession, then do the necessary repairs to the home and market it for sale, before you’re back on track.
Before you pull the trigger on the deal going in, it would be smart for you to visit with the on-site manager or owner if you can. That way you know the type of people you might be dealing with if your buyer defaults. Most park owners will work with you if you run into that kind of a scenario. They may be willing to discount the lot rent while you are going through that process, or even forgive it entirely.
Investor · San Antonio, TX · Member since 2016 · 90 posts · 28 votes
7y
@Jack Martin, excellent information. Thank you. I wasn’t even considering the fact that I would have to pay the lot rent in the event of default.
@Mark Sewell, this is a property they chose. To me, it does not make sense to pay lot rent, but plenty of mobile home parks’ business model is collecting lot rents.