All Forum Posts by: Bill Neves

@Jim Mack

I'm sure @John Fedro can chime in too. 

Q: "Private money or funding for the repairs and buying the mobile homes?"

A: I have, and know many people have, connected with other investors at Real Estate Investing Associations (REIA). There are lots of folks who have the money but not the know how. Or the money but not the time.

Investors who are short on funds or want to do some sweat equity, can have someone else fund the deal. Or have the money but want the deal to support itself, can let someone else fund it so you have no money of your own involved. Kinda fun!

This can go any number of ways. We like to say EVERYTHING is negotiable.

You can do a 50/50 split with the money person. A couple deals and you won't need them any longer.

You can do a hard money high percentage deal. However, most hard money lenders deal with stick built properties. Actual real estate. Mobiles are a different animal. Personal property and all.

OR

You can use a 1/3, 1/3, 1/3 scenario.

1/3 - I find the deal, manage the project (my business card says "Project Manager") and sell it for a share.

1/3 - money or funding person gets this for sitting back and letting their money work for them. A recent deal netted $11,500. The money person got almost $4000 for putting up $13,500 for 28 days. That's over 1000% annual return.

1/3 - repairs. If a contractor wants to be involved, they would repair what is necessary and get a share of the profit. 

Caveat: Contractors can be great and not so much. John had a recent post about that.

Now, I usually use one but not both of the splits. This is, I will have a money person OR a contractor involved in the funding. Never wanted to get too many hands involved. ie The money person on the last deal walked thru after the work was done and requested some things changed. I reminded them that they aren't going to live there and no matter what we do the new buyers will change something. He agreed and we kept going.

So.... If I have a money person, I will use that money to pay for the repairs. 

OR if I have a contractor, I will let them buy it and do the repairs for a share. 

My contractor agreements cover all that.

Just make sure the contractor is giving you a fair shake on repairs. If they charge $5k for a $2k job and then want a split, I would not work with them on another deal. That's fair, right?

Bottom line - there are lots of folks who will fund these deals. Takes a bit of legwork to find them, cultivate them and take care of them.

Have fun!

Well... @Roy D.

If you think of them as 'junk' you may want to stay with traditional stick built real estate. 

However....   I take mobile homes that people may not want and turn them into good quality housing for people who cannot qualify for a traditional loan and don't want to rent. They love me.

I did 160 stick built real estate deals before my first mobile deal. I specialized in foreclosures and short sales before the market crash in 2008. I would get calls from my advertising and declined many mobile homes. I always heard 'they go down in value', 'stay away from them', 'trailer trash', 'if it came in on wheels it's a trailer', etc, etc.

Once I did my first mobile deal, my wife and I did 17 in 17 weeks and could not believe it. I was kicking myself for being so snobbish about them.

Now.... some of them needed work but have you ever seen a bad foreclosure or a house that has been empty for months or years? Kinda junk? An investor can take it, fix it up and make good money. I've done it and thousands of others have done it.

A mobile home is just inexpensive to obtain and can get better returns than stick built, in many cases. You don't need realtors, title companies, and a lot of the other traditional stick built necessities. In most cases, a mobile home is personal property like a car. Most even have a title, like a car.

Many of the deals sell for cash, just like a car.

I just completed my 30th deal 2 days ago. Have right at $20k in it and it's listed for $29,500. There is only one other mobile in the area under $30k right now. I expect to sell for full price. Financing is available with half down with a Dodd Frank compliant loan.

My 29th deal, just sold a month ago... I got for $10k, put $3500 in it and sold it for $24,900. Full price, cash, no discount. That was a profit of $11,500. And we did it in 28 days.

Do the math. ROI was over 1000% annualized. What stick built deal will do that?

Read some of the other mobile home postings here if you are interested.

So, short answer? Yes.... there REALLY is money to be made in junk mobile homes.

Have fun!

@Orlando Paz

Hi. One way I was able to start investing almost 20 years ago... was to partner with someone with money and I did the work. Initially, I did the work free as an intern to learn from a rehabber. Then found people to fund deals and I did all, a lot or most of the work.

One common split is 1/3 for funding, 1/3 for "project manager" - finding/selling, 1/3 for upgrades and repairs. So you can also bring in a contractor to do the work for a share. Money person for a share and you get a share for finding and selling the deal.

Even if the money person wants a 50/50 split, so what? A couple deals and you should have made enough to go on your own.

In regards to Mobile Homes and Lonnie Deals, sell them for cash or lease option, etc. And yes, you can do that in parks. Just have to have the right paperwork. Many deals in my area are all cash lately. That way you can do some initial deals and use someone else's money to get going. Then break out on your own and rock it.

Caveat: Make sure you are compliant with Dodd Frank and Safe Act rules. Read about that elsewhere on this blog.

Have fun!

@Nikki Robinson

Good job! 

Do you hand write the signs or use printed? Testing has shown that hand written gets more response. Garage sale mentality. Non professional. People looking for deals.

Also, usually the code enforcement folks will call. Not the police.

Usually, code folks will give you a warning, if enforcing code rules in your area.

@Orlando Paz

I used to work for the Kiyosaki folks, doing trainings. Good stuff.

Don't know what experience you have with investing in general. Mobiles are a great biz.

As @Sam Ally mentioned above, go to REIA meetings and talk to people. If you don't know any, you can usually find them on Meetup.com. Lots of them in Florida.

As mentioned, you can learn from others by interning or doing work for them to learn. That's what I did to get started. Great free on the job training. 

Good idea to learn all you can first. I've had many great deals, some not so great, and some that were not fun at all. 

My wife and I are just finishing a mobile deal in which I had to fire the contractor and bring in a new one. That can wipe you out if you don't know what to do. We'll still do great on this one, just had a hiccup.

You can also find people who will put up the money if you do the work. Usually 1/3 to 1/2, of the net, goes to the money person on these deals. A couple deals and you won't need anyone else.

I have also found people like my chiropractor, dentist, friends, family, etc. They want to make money but are too busy in their work or business to do the work.

Have fun!

Most areas will not allow older than 1976 to be moved. Most cities/counties won't give a permit to move that vintage. Haulers can't legally move them. So leaving them in the park is the only option. 

One question I always ask the Park Manager (PM) is 'can the unit stay in the park?' Sometimes as mentioned, they want to upgrade the park so will give it to someone to move.

Just double check. 

Also I'd steer clear of them unless you're comfortable with them. I'd recommend to do at least 5 or 6 newer ones to get a feel for the business before venturing into deeper waters.

Good luck with it and....

Have fun!

I'd look at it. I have done several older than 1976.

In addition to plumbing - Aluminum wiring is in most. 

In my area, you must meet code requirements for older than 1976, in order to sell:

1 - Egress windows in bedrooms.

2 - Sheetrock around heater and hot water heater compartments. Also within 6 inches of open cook areas = cooktop and exhaust vent. Ovens are enclosed so exempt.

3 - All plugs and switches must be replaced with certified aluminum rated
OR needs a non corrosive grease (available at any Home Depot, Lowe's, etc.) on ALL plugs, switches, light connectors. (If you hire it out it's quicker to put new.)

This can run several hundred to several thousand $.

Also if it's free from the park ALWAYS ask for rent moratorium until sold. Like mentioned above if it were a screamin' deal the manager/owner would likely do it themselves.

Have fun!

@John Fedro   Hi John -  great questions.

Everyone,

As John knows I'm in my 60s. Bought my first home at 23 in 1973. Yikes! And have done investing since 1999. I've seen 1982 when interest rates were 18% or 19%, so I've seen lots of market changes.

Current market conditions:

From my perch, I see loans harder to get. Home ownership is at the lowest point since 1970. People have to rent.

So....supply and demand = more people are renting. Less availability pushes rents up. Landlords raise rates with the market. 

Either people rent apartments and deal with common wall neighbors, parking, pet and children issues, or rent house where rates are much higher.

They could rent something on land but that usually has higher rent costs.

OR they buy a manufactured home in a park, pay it off and then at least they control half the challenge.

---------------

So, to your questions, John - 1 - yes, I see the number of potential buyers of used mobile homes growing in number NOT shrinking? I am finishing up one right now and have 4 or 5 people with cash that want to know when it's going to be done. Not all deals are like that but some are.

2 - Yes, the affordable-ness of mobile home living supersedes the perceived negative stigma of living in a mobile home? ie - as an investor, I dealt only in stick built and I never messed with mobile homes. Once I decided to look, I was kicking myself that I burned so many potential deals by turning my back on them. The rental market is forcing people to alter their views.

3 - Would you say your buyers are mostly people that have lived in a mobile home in their past, or are virgins to MH living? It's a mix but I have had people tell me they are 'nicer than we thought' and at least they can buy 'something' and not have 100% rent.

The 'Mobile Home Formula' program John has, goes thru this nicely.

@Curt Smith does a good business with mobile homes on lots in a city. I believe he does a lease option for a year to cure the payments and then refis to a traditional loan for the buyers. Great program.

----------------

I have one on a lot but mostly I've done parks.

Most investors find a niche that suits them. I like mobiles for the low cost of entry into that investing market, with very high returns. And since most investors still steer clear, there is very little competition. 

Most stick built investors will net $20k-$50k and that's a good deal. But a lot of them are lucky to get $10k and have sunk $100-150k depending on the area. Mobile deals are similar in return but low entry. And a fiend in Seattle just finished a deal in which he moved one from land to a park. Had $100k in it and sold it for $160k. Do those numbers on stick built. Rare.

I recently went the courthouse to do paperwork on one of my deals. I passed the courthouse steps where there was an auction going on. I saw some of the people I use to see at the auction 10+ years ago. I stopped to listen and heard people grousing about rookie investors bidding up the prices trying to get a deal. So I continued on and did the paperwork on my completed deal.

-------------

Lately, I've been focusing on senior parks since I'm of that vintage. Seniors 'tend' to have cash to buy so no need to worry about financing.

And as John mentioned, I've taken my lumps. Any investor who says it's all rosy is not an investor or ?? Park managers and owners can make things interesting. I'll cover this in the program under due diligence.

Thanks for the questions all and...

Have fun!

Check some of the previous and extensive posts for more info.

Thumb nail version - You used to be able to buy a mobile home for whatever you bought it for. Then just take a down payment and agree on payments of x amount monthly for y months. If the buyer could fog a mirror, good to go.

After the 2008-09 housing implosion, Dodd Frank Act added many hoops to jump.

Including, pre-qualifying buyers to ensure they have the ability to pay. Not too much debt load, less than 43%. You can't discuss payments if you finance. You have to use a MLO Mortgage Loan Originator who qualifies the people.

If you don't do that, the buyers 'could' come back, down the road and say you didn't qualify them properly. Penalties could include - returning down payment, 3 years of payments and repairs. 

You could lose out big time on your deal. 

That being said - no one has gone to court, won a case, lost a case, been penalized, etc. But due to the potential impact, investors are very cautious. Use a MLO and you should be fine. Find one at a local investor club.

Have fun!

My first mobile home deal. 

I found one for sale on Craigslist for $6500. I offered $3000 and they countered at $4500. I said $3500. They said $4000 and we bought it.

NOTE: Most sellers will drop a bunch on the first round. Or tell you the price and say but it's flexible. NEVER say that when negotiating.

WE DID NOT TOUCH IT. It was in great shape. Older 1973 with AC, furniture, lawnmower. We sold it 7 days later for $9900. $2500 down and $250/mo for 3 years @ 12.75% interest.

NOTE: This is considered a Lonnie Deal which are not allowed any more due to Dodd Frank rules.

Have fun!