Dealer Status? - Posted by Carlene (Maine)

Posted by Larry on February 10, 2001 at 11:12:27:

I went to the Secretary of State for Michigan website and they said to get a dealer’s license you also had to meet fairly stringent requirements - place of business, etc. So now I’m completely confused. I’m incredibly excited to get started after reading Lonnie’s book but need to know if there is any State in the Union that doesn’t require someone doing multiple Lonnie deals to jump through numerous hoops to legally get started? Comments from anyone?

Dealer Status? - Posted by Carlene (Maine)

Posted by Carlene (Maine) on February 09, 2001 at 10:15:59:

Hello All,

Things are kind of slow here in Maine (snow and ice will do that!) I’ve still got some deals going, but I had a quick question for the more experienced folks…
When I first started this, I distinctly remember being told I did not need a dealers license. I have been told since, that I do need one. Can anyone shed some light on this subject?
(I would refer to my Lonnie Bible, but I sent it to my mom in Georgia.)
Thanks in advance for your responses.


Dealers can’t… - Posted by David Krulac

Posted by David Krulac on February 10, 2001 at 19:29:12:

  1. exchange section 1031 property
  2. defer gains through an installment sale
  3. depreciate property.
    That’s for federal tax and doesn’t have to do with whether your state requires you to have a license.
    David Krulac

Re: Dealer Status? - Posted by Susan

Posted by Susan on February 09, 2001 at 19:27:44:

Re: dealers in WA - help!
[ Follow Ups ] [ Post Followup ] [ CREOnline Mobile Home Q&A ]


I posted a “dealer status” dilemma a few days ago but buried it back down the line…am re-posting with this string because it’s all the same topic: what do we do when state dealer licensing laws are designed (seemingly) to prevent doing Lonnie-type deals? This is creative real estate right??! I’m new, I’m trying to be creative, but obviously Washington isn’t the only state with strict requirements. Are there ways around it or not? I just want to know so I can refocus on another are of CRE if I must, but I’m reluctant (can you tell?) to let this area go. Do folks just choose to risk it, not being licensed? Am I missing something?

As promised (below), I spent three hours on this site yesterday reading all about L/O, ordered course/tape/books, and am curious to hear if this indeed can get around the requirements (they are outlined below).

Even though state restrictions differ in the specifics, are there any general recommendations for how to get around the notion that only licensed dealers can sell to the public? I don’t want to beat a dead horse, but I am asking for some direction, especially from those in the group who are doing the deals in such states.

Thanks in advance - this site is so amazing for all its energy and creativity!

Posted by Susan on February 07, 2001 at 15:54:03:

In Reply to: Re: dealers in WA posted by Larry-WA on February 05, 2001 at 19:53:07:

Larry and others,

Thanks for the response/details on dealer license requirements in WA state. This is a bit disheartening, so I’m calling on the creative brain energy of the group for a solution!

I did call the appropriate state offices and ended up speaking with the “investigations” office division of the Dept. of Licensing for the state. The woman I spoke with had a lot of good information, but most of it was discouraging. Yes, it’s true that in this state, to obtain a mh dealer’s license one must have a commercially zoned office space, open between the hours of 10-4 (minimum) with a sign displayed (Also, $30,000 bond, background/criminal check). These requirements are designed to discourage “curbside” dealers from operating from homes, mobile offices, etc. The logic is that “the public” wants to be able to trust dealers, be able to contact them, see their operation, etc., and that this level of trust and professionalism can only be accomplished within the confines of a traditional business operation. Now, I can understand some of this logic, specifically, if my neighbor decided to deal in used cars, had them constantly parked all over the neighborhood, attracting a lot of non-residential traffic and clutter, I’d be an unhappy neighbor. But there seems no way around these requirements, even when the mh’s would never be on my personal, residential or neighborhood property, and even though the people I buy from/sell to would not ever be coming to my own residence. It’s just my computer and fax machine that are at home. (Actually, I’m hoping to never have to even move a mh from one park to another.)

Honestly, I’ve been really excited about trying “Lonnie deals” in my area (seems ripe for them, really). Now, it seems that my options are limited to (1).operating without a license (not too comfortable with that one) or (2) avoiding mh business altogether and sticking with traditional “real estate” and wholesaling/rehabbing. Is there anything more to try?!

One wild thought…can lease/option to purchase technique get around the “sale to the public” classification that gets me defined as a dealer? I don’t know much about the lease/option thing (although I’ll be doing a lot of reading on those as-yet-unexplored parts of this website immediately to remedy that!), but can anyone point me in a more encouraging direction? I have no desire to attempt to evade or ignore state laws, but I’d really like to try some of these mh deals!

Any ideas would be greatly appreciated!

Re: Dealer Status? - Posted by Michael Nelson GA

Posted by Michael Nelson GA on February 09, 2001 at 13:17:22:

I had the same question. Another post here mentioned having to get a dealers license via the State Fire Marshall, so I checked out the Georgia State Fire Marshall web site. Sure enough, here in Georgia you are required to have dealers license if you do more than three deals in a year. Its only $100 though, not bad at all considering some of the requirments I have seen here in other states. Check out the State of Maine’s Fire Marshall site (if there is one).

The Georgia Code btw is OCGA 8-2-135, pass that on to your mom:) The state has a searchable version of the
Georgia Code on their web site.

Re: Dealer Status? - Posted by Tony-VA

Posted by Tony-VA on February 09, 2001 at 13:08:20:

If your mobile homes are titled like cars are, you may want to start talking to people at the Division of Motor Vehicles.

There may also be an agency such as The Department our Housing and Community Developement that handles the licensing.

If you don’t receive a state spefic response here. The phone and web are your best place to start.


ps. Just to clarify, you will also here us refer to “Dealer Status” when talking about Lonnie deals. This “Dealer Status” is a term used by the IRS for the tax treatment we are given. Often times people assume that because they are not licensed as a “Dealer”, they will not be treated as such by the IRS. This is not so.

Re: Dealer Status? - Posted by Larry T

Posted by Larry T on February 09, 2001 at 11:34:46:

Please also include information on Michigan and Ohio. Thanks,

It might be a great idea to have all this information posted on the site with a link to it considering the number of requests for such info. Just an idea…

Re: Dealer Status? TAXES, TAXES, TAXES!! - Posted by Jeff Bliven

Posted by Jeff Bliven on February 10, 2001 at 17:54:09:

You’ll need ti check with your Tax Advisor… However, if the IRS sees you as a “dealer” status, I’m pretty sure when you sell a home, even on an installment basis, the entire “gain” is taxable in that year???

In other words:

$2,500 - Purchase price of coach
$8,000 - Sale price of coach
$1,500 - Down Payment of “New Buyer”
$6,500 - Balance of Note, whatever your terms

$5,500 - Gain on the Sale!!

THIS ($5,500) is the amount YOU, as a dealer, will have to pay taxes on in the Tax Year it was SOLD!!

Please, correct me IF I’m wrong!!??

I’d like to hear from some of the people that have been doing this for YEARS… How does it work with the IRS??


Michigan yes, Ohio no - Posted by Blane (MI)

Posted by Blane (MI) on February 09, 2001 at 15:56:13:


In Michigan MH’s are titled through Secy. of State just like cars. You must also pay 6% sales tax plus $45 filing fee unless you have a dealer license. License around $150/year, plus bonding required. Turnaround time for retitling about a week. Hope this helps.