All Forum Posts by: Terry Drake

Listed on craig's list.. I check it everyday to see whats out there but you'll find more deals by driving through parks and befriending the park manager.

I've always liked the way Texas does business!

For the first deal I would say to buy as low as you can, add holding cost, any other out of pocket expenses and double it. You will have plenty of deals you can squeeze ALL the juice from later. For now you just want to double your money, learn what you can, and sell it quick.

My first deal worked out to be less than double ($2500 out of pocket, $1500 profit and took a month of my time) but I learned a lot and the second deal almost tripled my money (2k out of pocket, $3500 profit) with less then half a day of time invested. Just hurry up and buy/sell your first so you can get to the second! :wink:

Also Lonnie made a good point about staying in the 2k-3k out of pocket range to get your money back the quickest. If you start spending more then that, it's either going to take longer then a year to get your money back or limit your buyers to the few with a thousand dollars to put down.

I find that $495 is a hard pill to swallow for some of these people (at least in this area) with their other out of pocket expenses (sales tax, title transfer, registration, insurance, lot rent, and possible deposits to the elec and water company).

$500 down
$200 lot rent pro rated
$250 sales tax
$175 title transfer/registration
$1125

If you want or have to make it more affordable to make the sale, you can keep the title in your name until next month to give them a couple weeks of paychecks before coming up with the sales tax/reg/transfer.

Thanks for the kind words and support everyone!

A quick update, yesterday was a good day! I met with the buyers for both homes, finalized the paperwork and handed over the keys!

Overall, the first one took a lot more of my time then I wanted, but the second one I only had a total of about 3 hrs (including drive time,sticking the sign in the ground, and phone calls). Deals like that motivate you to go get another like it!

I know insurance is a question that comes up a lot when financing these homes. In fact, I got a somewhat angry phone call from the buyers father in law, PO'd because insurance is mandatory on the note. Fortunately I had already been dealing with a good insurance company from a previous deal (mobile on real estate).

I explained to him that I have been dealing with an agent/company already and the cost involved were very reasonable but if for some reason it wasn't, we could work it out later. I also explained that there isn't a lender in the world that would lend money without some sort of asset protection.

I have also found out that for the buyer to get insurance on the home, it would cost $768/year but if I got the insurance for them (they pay for it of course) then I know that it's insured with me as the payee, and it only cost them $179/year!

I wanted to throw that out there to you guys in case you should run in to the same problems or high insurance quotes.

So what do you guys think about this? Let's say that the guh-ment does put it's heals in our backs yet again.. could we still Rent to Own without a problem?

In short, this was not a 15k home. I could have listed it for that much but these buyers know their market better then I do. Most of them have been in and out of mobiles their whole lives. This was not a 15k home for more than one reason.

-It is 40 yrs old
-Aluminum wiring
-No central air/no heat
-Evidence of water damage around most windows, and kitchen flooring
-I don't remember there being a hot water heater
-Last owners replaced some windows and did a shoddy job
-No car port/no storage shed
-The cabinets in the kitchen appear to be home made with plywood and white paint
-Soft walls

BUT mostly.. it's a 2/1 and they just don't move like the 3 bedrooms.

As far as why did I settle for only 4k? I had marketed this property so much that I went from 6 calls a day from craigslist to ZERO. It was old potatoes, especially since I had it over priced and under repaired for 2 weeks. If I were to do this deal over, I would have bought it for less then 1k, not repair a thing, and flipped it for 3k as is. Hardly any money out of pocket and it would have sold in a week or two.

I could have stuck to my guns and kept the price as 5k, but for one, the park had a nicer 3 bedroom unit for sale for 3k-3500 and two, if I stuck to my guns at 5k and held on to the property 2 months longer to do so, I would have been out of pocket another $750 and all of a sudden, I'm right back where I started around the 4k mark but by then all the excitement would be gone and I'd be left with a bad taste in my mouth after 2-3months of holding time. I didn't want my first deal to be a bad one and slow me down in anyway.

Honestly, I would have been just as happy if I broke even on this deal. The knowledge I have acquired on this deal is priceless!

BUT the BIGGEST reason I am just happy to let this go is because based on what I've learned through this one, I found two other deals that are highly profitable. I didn't want to screw around on this one so much that I missed out on bigger fish.

As I learned more about this business, the market, and whats out there I realized that I could do better on my next deal so I didn't want to get bogged down with this one. Price it low and let it go! I will make up for it on deals number 2, 3, 4 and so on.

Don't let the numbers on my first deal scare you away from the business. I'll tell you about deal number two I'm working on.. The park has a 3/1.5 vacant for about a year, and haven't been able to sell it for 3500 cash. She told me I could have it for 2k. I asked her if I could put a lock box on the property, show it, and buy it after I have a buyer. She said yes so I put a sign in the yard, lockbox on the door, and called down my buyers list. Less than 24 hrs later I have it under contract for $5500!! $500 down, 190/month for 30 months. (now I don't have to worry about competing with the park to sell homes!)

I almost feel bad that my post are so terribly long winded but I have learned so much from this and I want to pass on what I can to those sitting on the fence waiting to start!

For those following along..

Last Friday I had 3 what seemed to be serious buyers. One buyer said he was going to apply Monday morning, and wanted to meet Monday at lunch to talk numbers. Well, it turns out he had a huge rap sheet including harboring a fugitive, battery with a weapon, drugs, ect ect.

Luckily Monday morning I got a call from a man who lived in the same park with his best friend but wanted to get out before it ruined their friendship. He liked the place but most importantly, his girlfriend loved the place. I told them $4,500 financed.

He walked around and told me my price was too high, and teh central AC doesn't work, yadda yadda yadda. I told him that if the central AC worked, it would have been sold already for $500-$1000 more than I have it listed. Then I reminded him of the $250/month electric bill with a central air VS the window unit which is far less (according to the neighbors and residents I have talked to).

Then he told me he needs to be around $3,500. I told him that I would be happy to play in the low 3k range for cash and I don't mind financing it if I'm going to make money, but it doesn't make ANY sense for me to tie up my money for 2 years just to break even.

We agreed on 4k (note worked out to be $500 down, and $190/month for 20 months) and he said he would apply to the park and get back to me. I told him if he wants this home that he needs to get it under contract because there were some other buyers on the line (there really was). So I wrote up the contract and when we got to the $495 down part, he told me only had $200 cash until next week.

I told him that I could take the $200 cash IF he paid the remaining $300 on Saturday PLUS $365 March's lot rent. I figured worse case scenario, he backed out and I get to apply the $200 towards lot rent and sell it to someone else + pro rate the rest of the rent.

He called today and told me that he will have the $665 cash on Saturday.

I wasn't able to sell for double my out of pocket but I have learned so much from this deal that it doesn't matter. I have used what I learned, found my second deal and have the ball rolling on a third.

I will update this thread with details as the deals progress, not to be pretentious or because I'm looking for a pat on the back but because before my first deal, it was extremely helpful to read about others first deal, the problems they encountered, and how they handled them in the real world and I hope that my story helps someone else jump in with both feet.

On that note I will finish with my lesson(s) learned.

-DON'T repair if you don't have to! Out of pocket money KILLS your return! Buy RIGHT so you can sell right. If it needs repairs, you should definitely hammer the sales price down so you can sell it as is.

-Don't take repairs lightly! You don't just 'slap down' some linoleum and you don't just 'throw down some plywood'. All that stuff took a lot longer then you would think, and cost more too!

Cheers!

If she claims she has lived there for months, she should have no problem proving that her name has been on all the utilities for months. If she can't, that should be proof enough for the police.

Do you have pictures we can see?

**UPDATE**

Well I got this property under contract Feb 1st and it took until March 1st to get it under contract. Although it took 30 days, in my mind it really took two weeks. The first two weeks I advertised the home for sale as is (kinda dumpy) and the price was too high. I like many people new to this thought if I made the home affordable enough, it would move. I did, and it didn't. So I took the home off the market, made the repairs I thought needed to be done. Put it back on the market fixed up with a reasonable price and it was under contract two weeks later!

Here are the numbers:

Original purchase price: $1,000
Lot rent : $ 364
SalesTax/Transfer Fees:$ 150
Total Repairs: $ 905

Total out of pocket: $2,419

Repair cost ($905) broken down:

Handy man labor 25hrs: $375
Materials from HomeDep.:$200
Carpet and installation: $330

Knowing what I know now, I feel that I could have had this all said and done around 2k.

I will post some before and after pics as soon as I can get them off my camera (hopefully tomorrow).

Next we'll talk about the buyer, sales price, the negotiation, and terms.