Bad Crdit and Bad Background (Tony!, Lonnie!) - Posted by S.Canton

Posted by Bobbie on March 09, 2006 at 24:28:44:

WOW Tony…

…we never thought about this!
I read your post to hubby. It was as if his light bulb went off – he totally agrees. NO ELECTRICAL WORK will be done for this buyer.
See, something else we learned today. Thank you!!

Geeze-Louise, this buyer is going to be surpised if she calls back. A new attitude has been born.

I’ll keep you posted how it turns out.
Thanks bunches,
Bobbie :slight_smile:

Bad Crdit and Bad Background (Tony!, Lonnie!) - Posted by S.Canton

Posted by S.Canton on March 07, 2006 at 01:54:56:

I have 25K to start in real estate.I want to start with MH(low overhead).I have bad credit(trying to fix)and a background.I have to find a way to make a living.It seems as if I am going to run into issues w/ MH b/c of my background and credit.How can I get into this business? I have worked 12-hr nites for 2.5 yrs to earn this savings.I live in a N.east state but plan on doing MH deals in New Mexico.Constructive input would be highly appreciated.

Re: Bad Crdit and Bad Background (Tony!, Lonnie!) - Posted by Tony Colella

Posted by Tony Colella on March 07, 2006 at 09:51:19:

You have received excellent advice.

From a personal stand point let me add a few comments.

We are limited by ourselves alone. If we feel that there is a reason we may fail, we will fail. We are all weak in some area of this game and it is in the overcoming of that problem that we succeed.

You have worked 12 hours a night and saved $25k. This leads me to believe that you have put your past behind you. Those hours do not leave much time for getting into trouble. That amount of savings indicates you did not have time to get into further financial trouble.

You have consistently lived below your means for over 2 years now and the fruit of that labor is documented by your bank account but more importantly it can be seen by others through your actions.

Will it be easy to overcome mistakes of the past? No. Can it be done. Absolutely. Will it limit you? Only when you let it. Remember, when one door closes, another opens. The best advances I have made in my life have been preceeded by someone telling me “no.”

Some folks will look for an excuse not to work with you but honestly, chances are they have done you a favor as you would have likely found them difficult to work with later on. This way you have atleast wasted no time or money with them.

Most people I know respect those who have helped themselves up by their own bootstrap. We admire the self discipline of those who have overcome challenges. They may still be a bit weary of you at first but your actions will speak louder than words and in time you will gain their trust.

Bad credit can be repaired but as many indicated here, for Lonnie deals, your credit will not be much of an issue. As you progress into other types of deals, your credit can force you to become creative (one of the leading reasons creative investing was born). I know several successful investors who have terrible credit. Most have been forced to use techniques such as “subject to” deals but they have been very successful. But they may or may not be unique.

I find that if you are doing the right things as you now seem to be, and honor your word and commitments, good credit and trust will follow. It won’t happen overnight but neither does real, long lasting success.

Work as hard to keep your word as you have at your job and savings and you will be successful. I suspect you have already overcome challenges that the majority of people could not have. You have begun a trend of successful momentum. Keep it rolling.


Re: Bad Crdit and Bad Background (Tony!, Lonnie!) - Posted by JeffB (MI)

Posted by JeffB (MI) on March 07, 2006 at 07:22:03:

You mention you live in the Northeast but want to do MH deals in New Mexico… you’re planning to move there, right? Absentee MH ownership is not something I’d try, especially from across the country.

Re: Bad Crdit and Bad Background (Tony!, Lonnie!) - Posted by Ruben (KCKS)

Posted by Ruben (KCKS) on March 07, 2006 at 07:14:02:

Like the rest of the posts I have not been asked to pull credit in any of the whole two parks I have bought homes in.

One idea you might want to try if there is an issue is to put a larger deposit down. You are not going to be living in the home just owning it to sell so a background should not be an issue. Ask the PM if you put a larger deposit down would they let you work in the park. Do not offer the amount but be open. Maybe 3 months lot rent instead of 1 until your first unit is sold. You are going to get back the deposit so you may have to tie up more of your money until you establish yourself in a park. Then you can use your first park as referral for any future ones you work.

You are only limited by what you can negotiate. Good luck and let us know how you do.

Re: Bad Crdit and Bad Background (Tony!, Lonnie!) - Posted by Anne_LLC

Posted by Anne_LLC on March 07, 2006 at 06:58:58:

Michael and Ryan are absolutely right. I’ve never been asked by a PM for a credit check or to fill out an application- but if I were asked I’d find another park to work in. I want to be cooperative with the PM, but that doesn’t mean they get my personal info.

In your case I’d suggest you address the issues with your credit (which you say you are) and whatever your bad background consists of, forget it if you can. Whether it’s drugs or convictions, you need to leave that behind intellectually and emotionally. Concentrate on the fact that you’ve made this excellent money for your investments and move foward. Be a person who honors their commitments and is reliable and you will go far in this business.

And a final note- that $25K will be burning a hole in your pocket. I strongly suggest you operate your first 5 deals as if you had no more than $5K to your name, maybe even $2K. You will do better deals if you use less money. Ask me how I know this!! Be patient, follow DOW as closely as you can in your market, and then strike when you find a motivated seller.

good luck,


Re: Bad Crdit and Bad Background (Tony!, Lonnie!) - Posted by Ryan (NC)

Posted by Ryan (NC) on March 07, 2006 at 06:22:24:

Not Tony or Lonnie but…

Bad credit and the background are limiting factors only if YOU let them be, you will likely face a few more problems with some folks but there are enough mobile homes that you can over come them. The biggest thing is clean up your act and not to allow what caused the current problems into your life to rear their ugly head again.

I personally wouldn’t have a problem with it but I’ve yet to have a PM pull my credit or background when getting permission to do a deal in their park. Since it’s your money and you are not going to be living there it seems to me that all they care is that you bring in good folks and they get the lot rent every month when it’s due.

Lonnie deals are the place to start but if you can not face the PM’s for what ever reason you could go with L/H deals which is better than letting a problem stop you completely.

Best wishes,
Ryan Needler

Re: Bad Crdit and Bad Background (Tony!, Lonnie!) - Posted by Michael(KCMO)

Posted by Michael(KCMO) on March 07, 2006 at 06:14:10:

When I was first starting and going around talking to PM’s explaining what I wanted to do, only one or two expected me to fill out an application and go through their normal screening process. The fact that I was an investor seemed good enough for them and we’ve been operating in that same frame of mind ever since. Go out and hit the parks. Talk to the PM’s. Explain what you want to do. I’m sure there will be some who want you to go through the whole process, but there will also be some who simply say, “Welcome. By the way, there’s this guy over here who really needs to sell . . . .”

Another option is to “list” homes for sale. You work w/ the seller to find a buyer, but you don’t actually buy it until you’ve pre-sold it. A look through the archives should turn up some ideas on the topic.

Good luck.


Re: Bad Crdit and Bad Background (Tony!, Lonnie!) - Posted by s. Canton

Posted by s. Canton on March 08, 2006 at 05:11:29:

Alright Anne…per your own nudging (smile)… How do you know?..act as if I don’t have as much money to start investing.
Incidentally, I just discovered this website though I have read much about other investment vehicles in Real Estate. So I just now know to purchase DOW…on it’s way :slight_smile:
Thanks everyone.

Great Point Anne! - Posted by Ryan (NC)

Posted by Ryan (NC) on March 07, 2006 at 07:19:12:

The temptation to over spend on a unit that is an ok deal instead of a good deal is hard to over come when you have money sitting idle! After getting a black eye on a mover I personally run the numbers backwards using 80% as our minimum cash on cash return, makes it really cut and dry if a home is a deal to us or not.

Best wishes,
Ryan Needler

Re: Bad Crdit and Bad Background (Tony!, Lonnie!) - Posted by s. canton

Posted by s. canton on March 07, 2006 at 18:37:04:

I can not thank everyone enough for the positive input. All your suggestions are firmly implanted. Anyway, I will be a local MH person when I move to NM…hopefully just a few more months of night shifts.Ryan and anyone else? Is there anyway you can re-explain the 80% working backwards to prevent overspending or maybe a math book to figure out the jargon used. It’s appreciated.

Re: Bad Crdit and Bad Background (Tony!, Lonnie!) - Posted by Anne_LLC

Posted by Anne_LLC on March 08, 2006 at 06:17:20:

Well, that was a rhetorical nudge, but to answer your question, I know through painful experience. And some not so painful, but less profitable than they could have been.

good luck,

Re: Great Point Anne! - Posted by Bobbie

Posted by Bobbie on March 07, 2006 at 10:36:47:


How does one run the numbers backwards to determine good deal - bad deal?

I think I need to start doing this but not sure what to figure.

Many thanks in advance for any help you can provide,

math resource - Posted by Steve-WA

Posted by Steve-WA on March 07, 2006 at 19:23:29:

first, go to the local department store and getcha a cheap financial calculator - $30-35 oughta do it . . .

then, re-read DOW, and try to follow along with the grid calculations, especially the yield.

and as an added help, refer to this article by Lonnie, How To Use Your Financial Calculator:

THEN ask questions about what you do not understand

Running the numbers backwards - Posted by Ryan (NC)

Posted by Ryan (NC) on March 07, 2006 at 11:25:00:

This is not a one size fits all approach just a simple system that we’ve found that works for us. Everyone has their own system, market demands, and personal preferences which will dictate how each person handles their investment goals.

Depending on which calculator you use punch the following into your calculator…

PMT=est rent/payment that goes in your pocket (need to know your market for this one)
I/YR=Whatever your minimum yield is (we use 80% but can be whatever number suits you)
N=est. number of payments you’ll recive
compute for PV which is your MAX purchase price to reach your investment goal AFTER you pay for any repairs that are needed.

To check your math put your standard interest rate in I/YR and compute for PV… if the number makes sense as a reasonable retail price you know what you can realistically spend to get the type of return you’re looking for. We don’t add down payments ect. to this formula to cover any “what if’s” that may come up.

This is the system I use to keep myself from spending more than I should, there could be exceptions to the rule for really nice units where I know we can get a bigger down ect. with little if any work but they are the rare exception not the rule.

Best wishes,
Ryan Needler

Re: Running the numbers backwards - Posted by Bobbie

Posted by Bobbie on March 07, 2006 at 13:27:46:

Thanks Ryan.
I’m on it right now. Sounds like a good system to me. I’ve simply been winging it.
For instance. Bought a s/w 2/1 @ $7,500 (way too much). It’s not in pretty condition - but basically cosmetic only. Not doing any fix-up or clean-up at all – AS IS (meaning just as I bought it).
Selling for $12,500.
Just received a call from a woman who has $5,000 to put down and wants to see it.
I would not have purchased this one if I had your system. Another lesson learned.

Thanks again and happy day,
Bobbie :slight_smile:

Re: Running the numbers backwards - Posted by Ryan (NC)

Posted by Ryan (NC) on March 07, 2006 at 15:09:12:

Even paying “way to much” on your first deal you’re steps above most of the folks lurking here and the 30%+ yield you’ll earn on this first deal sure beats what the banks are paying.

Keep it up, it only gets better… :wink:

Best wishes,
Ryan Needler

Re: Running the numbers backwards - Posted by Bobbie

Posted by Bobbie on March 07, 2006 at 19:55:45:

Thanks for the words of encouragement – means a great deal to me. HOWEVER, this was my 5th deal since August.

Truthfully, the major mistake I made was letting emotions get in the way of this one. Should have just walked. I intend to use your system and be better prepared before making anymore offers.

I’m so addicted to this business. I’m finding it’s even better than chocolate!!

Happy day Ryan,
Bobbie :slight_smile:

Re: Running the numbers backwards - Posted by Tony Colella

Posted by Tony Colella on March 07, 2006 at 20:54:26:

Bobbie, glad you found a system of calculation that appeals to you. As I have often said, value is in the eye of the beholder.

However, I still can’t see how one can improve on Lonnie’s math. Buy for 1/2 of what you can sell it. Ok, some of us cheated about bought for 1/3 but hey, no calculator was necessary.

Ryan is a numbers guy and has a great understanding of them. For those who are not. Find out what you can sell for on a note and pay no more than 1/3 to 1/2 of that.

For me it was $3k max purchase price, sell for $9k. As I negotiated better, I bought for much less but kept the price about $7k to $9k.

I like to keep life simple. One handed math.


Re: Running the numbers backwards - Posted by Bobbie

Posted by Bobbie on March 07, 2006 at 23:09:20:


I DO agree with you and Lonnie about buying at the one-half price (to double your money). But what I didn’t do was take into account the repairs and space rent.
Example: Paid $7,500 and can easily sell for $14,500 (fixed up). Not fixed up, I can only sell for $12,500.

Side Note: Had a woman look tonight. She has $5,000 for down (love this tax refund season). After looking she wanted to know how much for fix-up price. I quoted $14,500 and now she wants it fixed up. She even went so far as to say she wants vinyl here, color of carpet, etc.
My response was this: When you get approved by the park and bring proof, we will fill out the paperwork. [I’m thinking: I’m not falling for this until I see park approval & non-refundable deposit to hold house while rehab is being done.] We fell for this on our first deal, won’t do it again.
If approved, gives me at least $1,000 non-refundable deposit, I’ll be happy to put vinyl wherever she wants and install the BLUE carpet she’s asking for. Oh and she wants the whole entire place painted bright white!!

Any suggestions?? Does this sound reasonable on my part?? I was talked into doing texture and some extras on our first deal and then the “prospective” buyer walked. It worked out okay, but added additional expense and time for us. Don’t want to go there again–thank you very much.

Suggestions or advice welcome,
Bobbie :slight_smile: