Avg yield survey and avg pmt - Posted by Blake ID

Posted by Anne_ND on May 03, 2006 at 10:40:49:


Sounds like you have an excellent Kleiner-like relationship with your PM. I, too, have found that the higher lot rent isn’t an issue for me because these parks also look the nicest and are in the most convenient area in my town. And the park is happy to direct me to the older homes that they don’t want to buy (but they do want to keep from moving out).

And, as you mentioned, you get the longer notes, which I like.


Avg yield survey and avg pmt - Posted by Blake ID

Posted by Blake ID on April 29, 2006 at 16:57:35:

Just curious but i was taking the day to go over some numbers and figure avg yields. I was wondering what kind of yields y’all are averaging on your MH’s, and what your ranges are. I’m ranging from 92% - 630% over 8 mh notes with an avg of 293%. (I’m excluding certain ones that are effected by financing, partnerships, or evictions etc.)

Other observations: I was talking to another lonnie dealer and we noticed that our average note payment + the lot rent = $600 per month for our buyers. When working in parks that hav l.r. of $300 we’re getting pmt of $300 for our notes and in parks that have l.r. of $350, we’re getting pmt of about $250. There’s some variance to that but it’s about right most of the time. Has anyone else noticed this sort of trend in their area? I’m thinking of staying away from the parks with the higher l.r.'s because of this. any ideas, opinions or observations welcome.-Blake

25 Active Notes - Posted by Dan (Michigan)

Posted by Dan (Michigan) on May 01, 2006 at 16:07:23:

Average Yield 290%
Average Pymt $231
Average L/Rent $400

My average payments include 2 Land/home deals that combine lot rent and note payment. As time goes by the yields increase even if the payments stay about the same or decrease. I like the higher lot rent parks because I can buy the homes for much less - $500-$1000 - most of the time. I don’t mind payments under $200 if I can get a sizable down payment. I’ve become a very unmotivated buyer and I get much better deals because of it.

Re: Avg yield survey and avg pmt - Posted by Todd (AZ)

Posted by Todd (AZ) on May 01, 2006 at 24:02:42:

Interesting way folks look at things. Mine look like this:

  1. Cash deal
  2. 323%
  3. 310%
    Have never held more than a month, never even picked up a paint brush yet. But, then again, we are only looking at three deals. Since I work full time, the deals have to meet my criteria or I don’t do them. So far, I pass on anything less than 80% yield. Perhaps I’m too picky/greedy, I’m not sure. Lot rent avg: $290 Home payment avg: $200 Todd (AZ)

Re: Avg yield survey and avg pmt - Posted by osupsycho (OK)

Posted by osupsycho (OK) on April 30, 2006 at 21:56:43:

Well I have an even smaller group to track but here is what I have gotten so far.
Note 1: 47.5% yield
Note 2: 43.6% yield
Note 3: 55.2% yield
Note 4: 140.7% yield
Note 5: still working but should exceed 200%

So that tells me I am getting better at doing this. The interesting thing is that the first 3 notes have terms of 5 years and the last 2 (the ones with much higher yields) have terms of 3 years. I really prefer the longer terms, even at lower yields, because I won’t have to worry about replacing them as quickly (not including any repos).

As far as the lot rent issue I have seen the same thing and basically stay away from the one park that is at a much higher lot rent because I know I will have to lower my monthly payment. Of course I may be getting a home for free in that park so that will make up for the higher lot rent and lower payment.

As far as the yield issue goes though I rarely consider it. In fact this was the first time that I calculated it out for all of my notes. My bigger concern is just following my business model on my homes. I want to sell the home for at least double what I have in it (everything from repairs and purchase price, to taxes and holding costs). I also want to have whatever I have in it out within the first ten months of note payments (including down payment). Also as I stated earlier I prefer to have my notes go for 60 months. Using this model I have been able to quickly analyze potential deals and see how much money will be needed to get me to the point where I can quit my job.

Just my thoughts,

Re: 25 Active Notes - Posted by Bob Smith

Posted by Bob Smith on May 02, 2006 at 17:59:24:

>I like the higher lot rent parks because I can buy
>the homes for much less - $500-$1000 - most of the time.

That’s a very unique and interesting perspective. Could you expand a little on the process that led you to that conclusion? Are the homes in any better condition in high-rent parks? Are the PMs any better to work with (I see a lot of high-rent parks selling mobiles themselves)?

Re: 25 Active Notes - Posted by Dan (Michigan)

Posted by Dan (Michigan) on May 03, 2006 at 08:31:53:

In my experience I have found that “high” lot rent ? which by the way is relative - tends to create “motivated” sellers. You see, high lot rent creates high holding costs for sellers. Most of the sellers I talk to are very eager to avoid writing another check for lot rent on a vacant, or soon to be vacant mobile home. When I visit a seller for the first time I make a point to discuss the ?high? lot rent with him/her while at the same time I also mention that high lot rent makes it very difficult to appeal to prospective buyers. I empathize with the seller and I let them know that I feel their pain. I also let them know in no uncertain terms that in order for me to take on their burden, they will need to make me an offer that I cannot refuse. I?m not playing some kind of game or scam here. I really don?t want their home unless they can make it very much worth my time.

Better homes don?t necessarily go hand-in-hand with parks that charge high lot rent. Many times it is quite the opposite actually.

High lot rent parks come with all types of managers: the good, the bad, and the ugly!

I have found that most of the corporate owned parks that I deal with don?t get too involved in selling and financing mobile homes.


Re: 25 Active Notes - Posted by osupsycho (OK)

Posted by osupsycho (OK) on May 03, 2006 at 10:03:34:

I have experienced some of the same thing and took a grilling for working in higher lot rent parks on the chat last week. You verbalize the rational for why I do it much better than I was able to, so thank you. I also work in corporate owned parks and am lucky enough to have a great PM to work with. The only downfall is that I can’t really deal in newer model homes as the park sells those and doesn’t want me to step on their toes. That hasn’t really been a problem though as they feed me all the older homes they get possesion of and I pick up most of the good deals from home owners that are available.


Re: 25 Active Notes - Posted by Dan (Michigan)

Posted by Dan (Michigan) on May 03, 2006 at 10:54:29:

Those newer homes that they won’t let you touch now will become older homes in the years ahead. I think of them as little seedlings that I will harvest in the fall. A good relationship with the PM is the water and fertilizer that will produce an abundant yield in the future.