Posted by Dr. Craig Whisler CA on April 23, 2002 at 22:22:31:
For sure you would want to be in contact with the seller a week or so before the date they need to be out, with your final offer. If you wait until the last day when you contact the seller you may be dismayed to learn that they have “just” given it to the park for back space rent. I learned this the hard way (a couple of times).
Regards, doc
1st Deal! Is it REALLY this easy?!?! (long) - Posted by Max (CO)
Posted by Max (CO) on April 21, 2002 at 17:59:10:
The MH: '73 14x60, old leak damage but sealed and secure. Celing has warped a bit from the leakage. Bathroom is an ugly caulking mess (caulk was laid on thick around new vinal shower stall and turned orange). The lady, her sister and two kids want to move to midwest ASAP. They owe $2500 on the home and need to get cash to move. Hope to get it for $2500-3000.
I put an add in the paper that just came out today (Sun) and have had FOUR calls already! Two “nice young couples” with small kids ready to head out on their own and not live with family anymore. One more “Nice couple” with no kids. I’ve been talking about getting $6000-8000 depending on down and monthly payments.
Problems: 1) I’ve never done this before…do I have everything I need? 2) I can’t get a hold of the park manager. Left messages since Thursday and no go. Do not know who he is and IF he will let me deal in this park. I do know he just split with his wife. 3) I don’t know who to choose to go into my home. How can you figure out which people are most likely to keep up payments and not be a problem? 4) For a first deal, should I try and go with the one with the most down and highest payments because that will get me my $$$ back quicker to use for more deals? 5) Is it really this easy? What sledgehammer am I missing?
Paperwork and things to do that seem necessary. Please correct or add on:
-Mobile Home Purchase agreement (Essentially from DOW)
I’m going to offer this lady $2000 cash that I can get to her next week. Willing to go up to $3000. but might as well start low and see. Will offer $100 promise money if she signs contract and shows me title.
-MH sales agreement for my seller (Again from DOW).
-Get credit report from PM (After finally meeting the PM) with signed consent form from buyer. BTW…What is a good/bad credit score?
-Promissory note (Again from DOW). Copy for me with “ORIGINAL” stamp on it and copy for buyer with “COPY” on it.
-Smoke setector verification
-Make sure buyer gets insurance. Where do they go? I know it’s harder to get insurance on older homes.
-Make sure I get the title when I hand the seller the money.
Can some one check these numbers and see if I’m using my new financial calculator correctly (Actualy asking and not being too facicious).
Buy for $3000
Sell for $6000 with $750 down and $225/mo payments at 12.75% interest. That translates to 26 months or 2yrs, 2 months.
After $1000 DWN I have $2,080 in the MH after paper ad and buying the calculator. I show my yield to be 118.61%! If that’s right that’s, “Good enough”! Am I right?
Sorry for the long post but I really do have some 1st deal jitters and it’s helpful to get it all down on the screen. Any advice would be GREATLY appreciated. My fiance was really unsure about it but after seeing the numbers and figuring that all three parties in the deal are getting what they want she’s thinking it’s pretty cool. Thanks in advance for your help!
-Max
Re: 1st Deal! Is it REALLY this easy?!?! (long) - Posted by terryr
Posted by terryr on April 22, 2002 at 22:34:11:
doc mentioned it by i will hammer it home - UNDER NO CIRCUMSTANCES KNOWN TO MAN - NEVER EVER pay for that home WITHOUT HAVING THE TITLE IN YOUR GRIMY LITTLE HANDS - NEVER NEVER EVER
Talk to Park Manager first ! - Posted by Dan (IN)
Posted by Dan (IN) on April 22, 2002 at 01:05:11:
Max, I hope it works out for you. But you mentioned Problem #2 ,the Park Manager. Unless you have an alternate site for the home, I would not commit to anything until you talk to the Park Manager and get his “OK” to deal in HIS park.
I know Park Owners and Managers who do not care about the lot rent from one home site, and would just as soon evict your home to prove the point that you are NOT playing on “their private playground”,unless you play by their rules.
Good luck ! Dan
Another point to consider. - Posted by Dr. Craig Whisler CA
Posted by Dr. Craig Whisler CA on April 21, 2002 at 23:28:42:
Max, I am writing, not to answer your original questions, but to mention a point that you may not have considered. That point is that it is sometimes possible to pay off loans at a discount if you approach them carefully. If the note is a private note, as many notes on older mobiles are, then as long as the note owner is not aware that a sale is about to take place (and possible full price payoff), you can sometimes ask for and easily get a nice discount on the note. Also do your own checking without tiping off the seller on this next point. Sometimes sellers just add up the remaining number of payments due and think that is the same as a payoff price. There will be some interest included in the payments that need not be paid if an early payoff takes place. This could represent a further discount to you if you don’t talk too much. Do your own math,and if the seller’s math is incorrect keep your figures to yourself. If the note is private I would offer about 65% of its balance and see what happens. Any discount you can get would be better than nothing. Why not offer $1,500 to pay it off IF the balance, NOT counting future interest is about $2,500. You don’t tell the note holder that you are about to buy the mobile. If you do you can kiss any discount goodby. You might mention that you buy notes at a discount and then just make them an offer, as I usually do. If they accept, get it in writing with a 30 day option to pay off at the agreed discounted figure and be willing to pay from $1 to $100 or so for your option, depending upon your negotiating skill. Have any option consideration subtracted from the purchase price if you exercise your option. Write this down in your option agreement. It might be best to get a short term option from the seller (like 15-30 days) at a fixed sale price that INCLUDES YOU taking care of the existing loan, with appropriate discount for doing so. This way if you can negotiate a discount it will go into YOUR pocket instead of the seller’s. Even if you don’t go the option route and just have a contract of purchase with the seller you could still do the same thing if you word your contract to reflect this. There isn’t such a great likelihood of an early payoff if a comercial lender is involved but ask for one anyway. You might get $500-$1,000 just for the asking. Remember that if it is a commercial lender who won’t give you a discount, you still might save a few dollars on the interest if the seller has just multiplied the amount of each payment by the number of remaining months to get their $2,500 payoff figure, provided that you word your contract to include YOU paying off the note instead of the seller doing so. One further thought. It may not be necessary to payoff the note at all. You might just take over the payments if it is not prohibited by the wording of the note. You might be able to get into this deal with as little as $500 of your own money, for the seller’s equity or “walking” money, if you just take over the payments. This could dramatically increase the rate of return on your actual cash outlay.
Regards, doc
Re: It’s not really this easy! Advice requested. - Posted by Max (CO)
Posted by Max (CO) on April 21, 2002 at 22:45:48:
I was hoping it was as easy as described above but the owner seems awfully set on a high amount of money for cash ($4200 was the lowest I got her to which was down from $5000). She owes $2500 still and also wants money to move to the midwest. I am pretty sure I can get $1000 down and a selling price of around $6000 for it. I have had five calls in one day from my ad and it still has 9 more days to run. If I can get $750 down and $225/mo it will be paid off to me in 27 months with a 61.55% yeild, even if I pay $4000 for it. Is that “good enough” for a 1st deal of should I hold out for a better price? Also, none of the potential buyers have looked at it and I know there are concerns with the celing (from an old leak)and bathtub (which has a bad caulking job). It sure is exciting playing with the numbers but I do want to get my 1st deal done.
Thanks for any imput.
-Max
Re: 1st Deal! Is it REALLY this easy?!?! (long) - Posted by ScottS(NC)
Posted by ScottS(NC) on April 25, 2002 at 08:02:29:
Terry,
I disagee in Max’s case dealing with company’s like conseco you cant close the deal with some one who owes a couple thousand and doesn’t have it. Unless you send Conseco the money and sign a purchase agreement. I have done this myself and would do it again. There are ways to safeguard this type of deal by paying with a cashiers check in your name and having the title sent to you. Terry don’t close your mind so fast open minds make more money. Take Care ScottS(NC)
Re: Talk to Park Manager first ! - Posted by Max (CO)
Posted by Max (CO) on April 22, 2002 at 07:00:21:
I finally got through to him after posting last night and he was very positive. He jumped to the conclusion that I wanted to rent and got very gruff but when I mentioned I wanted to finance he did a complete 180. Said he had no poroblem and started asking questions. He actually owns the place and wants to get it filled up. Started asking if I wanted to write notes on newer homes to help fill the rest of his spaces. Told him I was interrested but didn’t think I had thecash flow to do that quite yet. Anyway…he had no problem with that and gave me some general advice and was pretty friendly. He also said that this lady had been trying sell for about 6mo and was probably asking too much for what she had to sell. I am very relieved that he’s cool with it. Said any potential buyers could just out an application in the mail slot at the office and he’d look them over.
-Max
Re: Another point to consider. - Posted by Dr. Craig Whisler CA
Posted by Dr. Craig Whisler CA on April 22, 2002 at 12:35:06:
Max, its like I said, there isn’t such a great likelyhood of an early payoff if its a commercial lender. I just wanted to mention this point in case you had a private lender. If for instance you had been able to save $1,000 on a $3,000 deal that would have been a major savings for you. I don’t think it would occur to most new investors to even ask for this potentially free money. They just don’t start off with a mental checklist of all of the latent possibilities in any given deal. Most folks start off just thinking in terms of X dollars to buy, double the price and charge 12.5% interest. You know how it is when you buy a new car. There is the base price plus little extras like a steering wheel, and four tires. Faster than you can blink your eye your base price has doubled. It sure is agravating when this happens, when I am on the other end of the stick my 'tude changes rapidly. In time you will begin to see a lot of possibilities for building greater profits on mobile home deals through dozens of little ideas like this one. Sorry you turned out to have a commercial lender. At least now whenever you come accross a private note you should think of asking for a discount. Perhaps this will help someone else.
You know, Max, whenever I am trying to buy something with an existing note, I consider the possibility of RENEGOTIATIONG the existing note to try to improve it for my needs. This is something that I rarely ever hear about. Sometimes the note holder has become very accustomed to receiving his monthly payments and would like them to continue forever. I can help him make tht happen, and you can too. If the note is too short and has high payments that are stressful to my cash flow I might be willing to raise the interest rate a point or two in exchange for a lengthening of the note by several years, thereby resulting in lower payments for me. Sometimes this can make the difference between, positive and negative cash flow. Sometimes if the security value is enough the note holder might want to advance me additional cash and add it to his note. I have come accross a number of note owners over the years who compare the interest rate on their notes to what the bank might pay on a CD and they realize they would be bettter off to keep their notes going forever. Never had it so good (me or them). People in the business of owning trust deeds and mortgages often send regular notes to their good payers offering to advance more money on the same terms. It can be good business for everyone involved.
Even if you can’t use these ideas right now, at least try to remember them. Try to become a possibility thinker. Mental exercises can be good for your financial health.
Regards, doc
Regards, doc
Re: Loan is through Conseco - Posted by Max (CO)
Posted by Max (CO) on April 22, 2002 at 06:54:57:
My seller’s loan is through Conseco at $137/mo. She said she is a little over 6 years through an 8 year loan. I don’t see too much interest left on this loan. I don’t even know how to go about talking to Conseco or if they would be willing to take a discount on the note.
Good idea though and if you see a way to make it work out better for me i’d appreciate it.
-Max
Ask seller if she has a… - Posted by Dr. Craig Whisler
Posted by Dr. Craig Whisler on April 21, 2002 at 23:38:09:
…date certain, by which she must move. This will give you a little better idea about when she may be most amenable to an offer below her asking price. Its nice that you have 6 calls but don’t let that affect your judgment about how much to pay for this mobile. You should be able to get the seller down to $2,500-$3,000 as discussed earlier. You will likely have many unexpected expenses so don’t get so excited that you pay too much.
Regards, doc
Doc - Posted by brad
Posted by brad on April 23, 2002 at 14:38:45:
Doc this is something that i have thought about for quite a while and i am still tring to figure out how to contact the note holder about purchassing a certain note without all of there red flags going up. i found a couple that are privatly financed and think the deals are doable but how other than tring to buy the home do i find out who has the note on personal property. with real estate this is easy. but on a mobil how.
Re: DOC-unexpected expenses? - Posted by Max (CO)
Posted by Max (CO) on April 22, 2002 at 13:13:50:
Doc- What are some inexpected expenses shoudl be on the lookout for. Obviously this is my first deal and the more info I have the better.
Thanks for your replies and willingness to help.
-Max
Re: Doc - Posted by Dr. Craig Whisler CA
Posted by Dr. Craig Whisler CA on April 23, 2002 at 22:15:38:
Brad, when you are offered a mobile home that is for sale and has a note on it just ask the seller if you can review the documents and take notes so you can go home and study them and prepare an offer.
I am generaly reluctant to suggest doing something that I have never done myself but I think it might be OK here. I would suppose that there would be some kind of a UCC recording concerning the the security for the note with your state’s sectetary of state. I bet if you contacted the agency in your state that handles the mobile home titles they could give you a better answer than I can. I also supppose that any bank or lender that makes business loans, personal property loans or mobile home loans could give you a quick concise answer, as could mobile home dealers in your phone book. Your answer is just a phone call away. This is the third time today someone has asked me a mobile home question that I couldn’t answer. It is good for me because now I have some new information to research. The answers will benefit me as well as others. We can all learn together. Sharing information is so great.
Regards, doc
Sleep well tonight, Max, if you can. - Posted by Dr. Craig Whisler CA
Posted by Dr. Craig Whisler CA on April 22, 2002 at 17:24:07:
Hi, Max. Some possible unexpecded expenses are:
Back space rent, including utility costs. Some utility costs may be mandatory even if the mobile is vacant and unlived in, during your holding period. Such costs might inclued, but are not limited to water and garbage disposal and possibly a fee for grounds maintenance.
Back property taxes due and transfer of title costs
Space rent after you buy it but before you sell it. It is wise to budget 3 months or so for a worst case scenario. Most Lonnie deals are flipped (resold) in 2-3 weeks but on your first deal make extra allowances. Consider advertizing costs too.
be careful not to pay for the mobile until you have the title in your hot little handsas. Sometimes in their enthusiasm buyers buy a mobile with the understanding that the seller will locaate and mail the title to you right away. If there is a loan on the mobile the lender will most likely be holding the title. The same caution is in order for lenders. Don’t let them just promise to get you the title by mail in a few days. Sometimes a few days becomes a few months when they can’t find the it. Meanwhile you are the one with the privilege of paying rent on the mobile and don’t have a title for resale.
There are often unexpected repair costs. It is good to check EVERY major apppliance such as heater, water heater, air conditioner etc. Look under sinks for water damage and look inside of closets at the ceilings for water damage. Sometimes they will repaint a room to conceal this but neglect to paint the closet ceilings. Never take it for gospel that the seller has really repaired the roof as they often claim. If mobile is empty and the water is off be sure to turn it on, especially if you live in an area that freezes in the winter. For simplicity I carry a short washing machine hookup hose. It is because this kind of hose has female fittings on both ends. When you connect this hose to a regular garden hose you will still end up with female fittings on both ends. Now you can just connect one to your outdoor water fawcet and the other end to you next door neighbor’s out side faucet (with permission of course). When you turn on both faucets the neighbor’s water will fill and pressurize your mobile home so you can check for leaks. If the mobile was allowed to freeze during cold weather you may find your mobile sprouting Like a Chia pet. Seller always says “Gee I didn’t know about that”. When you negotiate your price make it contingent on all systems working properly. Be sure to get this in writing. If you must repair deduct a generous amount from the price you offer to pay. Walk over EVERY square foot to check for soft or spongy flooring under the carpet due to water damage.
check to see if and how much may be owing in back peroperty taxes on the mobile. You need to check with whatever licensing authority you have in your state. just call any mobile home dealer and ask them on the phone if you don’t know.
Sometimes on older coaches the park may require you to paint and or other wise fixup the outside of the coach.
The most important thing of all is to be sure the park will allow you to do this deal in their park and be very sure they will cooperate with you.
Its will be good if the park isn’t also competiting with you by buying and reselling mobiles. If that is the case you may find it very hard if not next to impossiblwe to get the park manager to approve your buyer. Without his approval you are S/O/L. Just so there is no misunderstanding that means you are very much out of luck. If you can’t get the park manager to approve your buyer you could be paying park rent for 6 months before you decide to spend (lose) a couple of thousand dollars tearing down, moving, and storing your mobile home somewhere else. It is good to know if you will be getting wheels, axels and the front tongue just in case this becomes necesssary. I would put a clause in my contract that prohibits the buyer from moving or making any modifications to the mobile without my written permission. How would you like the buyer to convert your nice three bedroom mobile it a 1 bed room unit or paint your beautiful (simulated) wood paneling purple with pink trim and then moe out and give you back the mobile?
reposession and eviction legal costs space rent while doing these could be a factor, expecially if you are new and get too excited to receive your $500 downpayment. Check out prospeciive buyer’s credit thoroughly and don’t be afraid to ask for a larger downpayment and or a quality co-signer on the note you take back. also check his former eviction record, if any. If ANY evictions, deep six his application and count yourself lucky that you checked first. Repossession is much harder and more costly than an eviction.
Other than these few minor points I can’t think of anything else that could go wrong, but I could be wrong. I guess there is always Murphys’s Law to condider. Buying really cheap is necessary, and it will cover you for a whole host of unexpected expenses and mistakes. There be many a slip betwixt the cup and the lip. I intentionally left out numbers 5 & 8 to give you something to be concerned about. Well, sleep well tonight, Max, if you can. :~)
Regards, doc
do you have the cash. - Posted by Brad
Posted by Brad on April 23, 2002 at 14:56:59:
if she has a definate out date then what i would try to do is walk up with what you want to pay in cash in your hand,well most of it, put the rest in your pocket. tell her that you cannot come up with what she wants but you found annother home (for all of the overly ethical here, go do just that first.) but thought that it would only be fair to offer her the money first. tell her what you have. and see what happens. remember you make money on the purchass