Beat me up and criticize this non-Lonnie deal. - Posted by RobertR

Posted by L.V. Williams on October 03, 2000 at 23:50:40:

Dear Sir I am Entrested in opening a repo mobile home lot in Fort Payne Ala.Area please e-mail me and let me know who and how to get started I have 3 acres on the new hw35 between Fort Payne and Rainsville Ala. Thanks L.V.Williams P.S. I also want to purchase repos

Beat me up and criticize this non-Lonnie deal. - Posted by RobertR

Posted by RobertR on August 01, 2000 at 19:55:21:

And do not mind if I take it personally.

Here’s the deal. Park owns a home. Seems as though they acquired it for back rent. It is a 1983 16X80, newest home I have considered, let alone purchased. The park wants $20,000 and they will put in $3,000 in repairs to meet their own requirement of having an asphalt shingled roof. This one is a pitched roof, but metal right now.

I asked the manager how much she would take for all cash. (Thanks Lonnie). She said she could take no less than $15,000 and she still would do the $3,000 repair. That was a quick $5,000 question. And I can still ask for a further reduction.

The park may have a buyer for the home is the manager can find the paperwork. I probably would not go ahead without a built in buyer.
The probable numbers are:

Sell for $21,000, $4000 down. Have $11,000 in the deal. Take back a note for $17,000 at a minimum of $350/mo. The usual non-standard interest rate, 18%. Yield is 35%.

Ok, what do you folks think aside from the fact that I could do several smaller deals with higher yields if I could find them. One benefit is this home will not be kicked out of the park if I have to sell it again. And I shall ask for that in writing. That is an issue here.

Your feedback is welcome.

Re: Beat me up and criticize this non-Lonnie deal. - Posted by Dan (NC)

Posted by Dan (NC) on August 03, 2000 at 12:31:26:

If you want to buy wholesale, don’t shop at the retailers. Contact the various MH lenders and ask for their wholesale repo list. Conseco and Greenpoint are the obvious big boys, but there’s also Dynex at (877)367-39639 ext.256, CIT at (800) 621-1433 ext. 1724 or 1687, the Associates Housing Finance at (800) 261-8243, Bombardier at (800) 763-2838, and Oakwood Acceptance at (800) 651-4625. You may have to struggle through their voice mail system and corporate structure, but it can be worth it. Some will give you only the wholesale list, others give both retail and wholesale lists. Depending on the number of homes they have and the business cycle, they might be looking for top dollar, or they might want to move some homes. And don’t limit yourself to just their wholesale list, although that’s more likely where they will be willing to deal. Good luck.

Thanks for the thoughtful suggestions. - Posted by RobertR

Posted by RobertR on August 02, 2000 at 16:09:06:

The home is a 1987, not a 1983 as I originally posted. The park has not located the buyer, so there is no deal yet.

I gave only cursory thought to the idea that the park would resent me buying their unit low with cash and selling high with terms. This is an important point. I may ask the manager how she feels about this when they find the buyer. I may even suggest that they do what I am going to do. If they decline, there should be no hard feelings. “Should” is the operative word here.

Some of you who think 35% is too low of a yield would readily sell me one of your own notes at 18% or so. Why not create my own, in my own backyard at 35%? Of course I will try to do better but If I cannot, why not? If the note goes bad, then I take back the home and do it again.

Thanks again for helping me.

PS-In our area, retail on most any year 16x80 is $20,000 and up.

Re: Beat me up and criticize this non-Lonnie deal. - Posted by Tony-VA

Posted by Tony-VA on August 02, 2000 at 05:25:01:

The others have made very good comments. They just about covered it. I had a couple of comments as well.

First this is obviously not a traditional “Lonnie Deal” as you know. That does not mean that this is the only way to make money in mobile homes. However, if you are going to buy outside Lonnie’s parameters, you will have trouble selling using Lonnie’s parameters.

Personally I would pass on this home due to the cost. Actaully the strongest reason for me passing on this home is simply that I do not like to buy retail homes from the parks. I do buy some “cheapo homes” from the parks. These low end homes are a pain for the park managers and they seek my help to get them off their hands and get the lot rent performing. They are very flexible when negotiating on these homes. Usually the park manager does all the talking and I end up with the home for next to nothing. This is how motivated they can become.

Now in your case, the park has a home that it has hopes of making some money on by essentially retailing it. We as investors cannot buy retail. These deals are contingent upon locating Motivated Sellers and making money going into the deal via buying right.

When parks have retail homes, I avoid these homes. I think that it puts us on opposite sides of the table. I need these people for future Lonnie deals. If for some reason they think that I bought one of their retails too cheap, it may effect my future deals.

My suggestion is to let the parks play retailer if they want to. Simply explain that as an investor, you must purchase older homes for much less. Explain that you typically buy homes that are not as nice as theirs. (This makes them feel good about their “nice home” and helps them understand your market better). I would much prefer to miss a deal requiring that much money out of my pocket with a smaller yield, than to cut my own throat by somehow offending the park manager by buying their Nice Home for little money, then selling it for double (or whatever). Even though we will only get a small downpayment and finance the rest, the park will see this huge Sales price and think we took advantage of them.

Sometimes it is just wise to let the park try and make some money on these deals. If it doesn’t work out, perhaps in the future you may get the home but for now, I suggest you pass.

Best Wishes,


Re: Beat me up and criticize this non-Lonnie deal. - Posted by Jim-AZ

Posted by Jim-AZ on August 01, 2000 at 21:03:48:

Hi Robert,

Where are you? What market are you in? That sounds like an AWFUL lot to pay for a 1983 unit! How motivated is the park owner/manager? How motivated could they ever get. It seems they might be able to afford to hold out longer than an owner/occupier that might get “more motivated, more quicker”. I’ve passed on a number of potentially doable deals waiting for one that more perfectly fits the Lonnie profile. Can you do that, too, or is this the only kind of deal you’re seeing? Can you really sell it for that much? Lonnie says to try to sell a little bit below full market. The other “challenge” I see, is you’re tying up a lot of capital in one deal. You’re right, though, with a definite buyer in mind it might be OK if done as a QUICK turn, unless you can cut a deal with the park for “free” lot rent for a month or two whle you market it. Any other repairs or other expenses you have to put in to it? In the absence of a compelling reason to do it, why not take a pass and wait for a better deal – or two – or three, for the same capital?


Ask for another reduction, then another, then another… - Posted by Blane (MI)

Posted by Blane (MI) on August 01, 2000 at 21:03:00:

Hi Robert,

$11K in one deal is just too much for me to stomach. I’ve one deal closed and 2 more about to close and my total $$$ in the deals doesn’t total 11K yet. Of the 2, one might be about a 65% yield, and I’m a little disappointed with that, as I paid too much for the home on the chance I could do a quick flip and cash sale (ain’t gonna happen). After reading posts and learning, 35% seems a bit skinny. Can’t hurt to do what Dirk said and offer some cash. Good luck either way.


well you asked for it… - Posted by Dirk Roach

Posted by Dirk Roach on August 01, 2000 at 20:46:23:

Paragraph 5 says what I’m thinking…
But more importantly 35%???
That doesn’t sound like much fun to me.

How about going in there with 5k cash, putting it on the table, and say, this is all I got?

What kind of deals have gotten from MH lenders in the past? - Posted by Earl

Posted by Earl on August 03, 2000 at 14:52:48:

Dan, what kind of deals have you gotten from the MH lenders in the past for late model homes 2-5 yrs. old?
Is there a certain percentage that you shoot for, when you make your bids on the wholesale list, like (50)% of wholesale price or (30-40)% of the retail list price. Even at these percentages, you might wind up paying 10-12K for a 3 yr. SW or 23K for DW. If I paid this much for a mh, I would need to cash out on the sale. What are the odds of being able to find buyers , who can obtain financing on $30K - 40K mhs.


Opportunity Cost - Posted by Tony-VA

Posted by Tony-VA on August 04, 2000 at 07:34:19:

Many times I look at deals from the standpoint of opportunity cost. By this I mean, if I invest this much money in this deal at this yield, it there an opportunity cost to me in which I could be investing the same amount of money in more deals and/or higher yield.

That being said, I also look at deals using my baseball analogy.

Not all deals need to be homeruns. For awhile I would only do deals that exceeded well over 100% yield. These deals are great homeruns. You can also go broke waiting only for homeruns.

So from time to time I do deals that are more like singles than homeruns. These deals may yield closer to 50%. This way I get more deals working, more money coming in and less money sits at the BANK doing next to nothing.

There are ways of increasing the yields on the “singles” also to make them even more attractive. For instance, these maybe deals that I do through my IRA so that the yield is not taxed now (tax deferred, traditional self-directed IRA). Or I may partner with the IRA so that some of the deal goes to the tax deferred IRA and some goes into my pocket and yes gets taxed.

Partnering with the IRA actually is in line with the opportunity cost test. By partnering with the IRA, I take out 1/2 the money (for example) from my pocket and the IRA pays the other half to purchase the home. Since my yield on the out of pocket dollars will be a bit lower than a homerun, I limit the amount of out of pocket dollars I use in this deal. That way I have cash on hand for the next pitch.

Also, in looking back on my last post in this string, I don’t think I made things very clear. I don’t have a calculator with me to show an example but shoot me an email and I will walk you through some numbers.

I will try and answer this specific question better.

You wrote:
“Some of you who think 35% is too low of a yield would readily sell me one of your own notes at 18% or so. Why not create my own, in my own backyard at 35%? Of course I will try to do better but If I cannot, why not? If the note goes bad, then I take back the home and do it again.”

By selling you a mobile home note that will yield YOU 18%, I would receive MORE cash.

By selling you a mobile home note that will yield YOU 35%, I would receive LESS cash.

So yes, we would prefer to sell notes that would yield 18% to you as oppossed to 35% because OUR yield would be greater because the discount would be less.

Buying a mobile home note that would yield you 18% would almost be face value.

I would not recommend buying mobile home notes at or near face value because of the risk involved (repossession, poor credit etc.). Because we are investing in notes of higher risk, we should get higher yields.

So the reason my last post seemed confusing to me was that I needed to clarify better who’s yield we are talking about. The buyer or the seller? That may be where you got lost.

If you hear someone talking about yields, we need to clarify who’s yield they are referring to.

Hope this post is a bit more clear.

Best Wishes,


Re: Thanks for the thoughtful suggestions. - Posted by Tony-VA

Posted by Tony-VA on August 04, 2000 at 05:47:10:

A comment on notes. I think you may be confusing yield and interest rate.

Or you may be confusing the idea of loaning against the note, as opposed to the actual sale of the note.

Many investors will loan against a note and pay 15-18%. If they wish to sell the note itself, they usually have to discount the note (receive less cash) in order to boost the yield up for the person buying the note. I don’t know many who would buy a mobile home note yielding only 18% but I guess there may be some.

Each note reads like a different story. Some notes may have been created on homes that buyers put down very little down payment. An investor in this deal would need to sell the note for higher % to make any money. Chances are, they will loan money against the home for 18% and make out better.

Another home may have had a large down payment. The investor may have recouped their costs and be looking for a quick cash out and be willing to accept less money for their note.

Clear as Mudd right???

Try punching some numbers and it may clarify it better.


Re: What kind of deals have gotten from MH lenders in the past? - Posted by Dan (NC)

Posted by Dan (NC) on August 04, 2000 at 08:44:16:

Month to month, and even office to office, there’s no telling what Conseco might accept. I look at 3-4K for mid nineties models that may need a little work and have some back lot rent. Total shouldn’t be over around 6K. You can finance those yourself for 2K down and 16-18K total, or work with a local, hungry dealer to find a qualified buyer and cash out. Right now my local Conseco office is being a bit stingy, but another office 150 miles from here is reportedly “giving 'em away”. I’ve been making offers on packages of several homes, but that doesn’t seem to influence their acceptance decisions. Of course, you will check out the homes before an offer (get a pass key if you can) but also check them out again after an offer is accepted but before you pay. You’d be amazed at what a group of kids can quickly do to a home they discover is empty. Contact the head of inventory control for your local office and see if you can get the repo list early.

Re: What kind of deals have gotten from MH lenders in the past? - Posted by PaulNM

Posted by PaulNM on August 03, 2000 at 15:41:23:

I bought a 1995 Fleetwood 16 x 80 from Conseco’s wholesale repo list in June for $5,100. They don’t get on the repo list if they look pretty!! This one was up on wheels in a dealers lot, missing front door (frame & all), sliding glass door, no carpet, bathroom floor problems, no appliances, and the walls were painted an attractive lavender. The electrical panel had been attacked by a do-it-yourself’r and most breakers were missing. I haven’t done enough of these deals to know if this was unusual or average.

Re: Opportunity Cost - Posted by Moses

Posted by Moses on October 16, 2000 at 14:53:24:

Well i need all the text on opportunity cost

Suppose I lend you money at 18%… - Posted by RobertR CO

Posted by RobertR CO on August 04, 2000 at 13:30:24:

…where a mobile home note is the sole security for the loan. How different is that from buying a note at an 18% yield to me?

Tony, thanks for the time and energy you put into helping us with your posts. We notice the lengths you go to.

Sometimes even 18-25% looks good compared to 6% money markets.


Re: What kind of deals have gotten from MH lenders in the past? - Posted by Earl

Posted by Earl on August 04, 2000 at 12:39:45:

Thanks, for info.

Re: What kind of deals have gotten from MH lenders in the past? - Posted by Earl

Posted by Earl on August 04, 2000 at 12:41:27:

I appreciate the response.


Conseco repo - Posted by david Swett

Posted by david Swett on August 03, 2000 at 19:09:28:

What cost have you had to get MH fixed up and installed on a lot? It looks as if you could spend $3-4k, still double your price and make a sale to get a good yield.

I like the model year, it seems as if final sale figure would be in high teens.


Who’s on the hook??? - Posted by Tony-VA

Posted by Tony-VA on August 04, 2000 at 15:54:27:

Good question.

Would you rather have my company guarantee a loan to you at 18%, secured by a note, secured as a first lien on a mobile home…(I agree to pay you on time even if the person paying on the mobile home note is late. I agree to repossess and cover court costs, lot rent etc. to get the home back and substitute a new note as collateral for the defaulted note.)


me simply sell you the note backed by the first lien on the mobile home and you try and collect as best you can? If the note defualts, you have to cover legal costs, lot rent, fix up, marketing etc. to resell the home. (Not always bad if you buy right because you may be able to sell for more but this is another discussion entirely)

By loaning the money you get me on the hook too. By buying the note, you only get the note.

Also in reality you may not always be talking the same dollar amount. For instance, I may be willing to take a $2500 loan at 18% against my note, but I may not be willing to sell my note for $2500.

Again it gets back to who interest you are talking about. If I am talking about me, you may buy my note for a yield in excess of 18% but it will cost you more than $2500 dollars.

But to get back on topic, let’s not invest at for 18% yield. Let’s get back to Lonnie yields of min. 50% or better, those are the numbers I like.

It does get confusing so some times you just have to walk through it slowly and see which side of the deal you are on.


Re: Conseco repo - Posted by Kerry Hansen

Posted by Kerry Hansen on September 05, 2002 at 11:50:27:

I was wondering if there is a way I can look at Conseco’s repo list for any property that is located in Marinette County, Wisconsin. Please response back as soon as possible. Thank You!