HUGE Opportunities for us the next few years - Posted by DougO(NM)
Posted by DougO(NM) on February 05, 2002 at 15:30:51:
I am currently at the Quarterly Meeting for the National trade association for Manufactured Housing, MHI (Manufactured Housing Institute) (Hello to anyone in San Antonio!, it’s beautiful here on the riverwalk)
If you haven’t noticed, there are HUGE numbers of MH repo’s going onright now, and it has created major oppportunities for enterprising entrepreneurs! I listened to a panel of the Big Six lenders still left in the MH Retail Financing, as well as some of the largest owners of MH Communities the opinion is this will take at least several years to work itself out. Some of us saw this coming, and did some prep work to be in posistion. (Cleaned up credit lines and increased cash reserves) Now is the time to be doing what we do best. Solve problems. We have lenders with many non-perfoming assets on their books. Communities with empty homes, many being vandalized, communities with vacant sites that can be filled by us with repo homes. It behoves both parties to work with a professional that is willing to put their money where their mouth is. I know that many of you will say, I talked to Conseco and was offended when they refused my offer of $1000 for a home they wanted $19,000, you just can’t buy repos! Folks, I’ll let you in on a secret. If I waited to find the $1-$3,000 MH’s to buy to sell for $2-6,000, I’d still be waiting to do the first deal. Every market is different, but what I’ve found in my area probably hold true to one degree or another around the country.
Some of the numbers being thrown around at this meeting are interesting: Last year there was about 193,000 new MH’s sold, and over 80% were financed by institutional lenders. Pre-owned home sales were probably in the 500,000 unit range, and less that half of those being financed by “the big boys”, at an average of about $20,000. (Funny, thats about what our average sales price is!)
That is a conservative estimate of a 250,000 unit market for us. And Lonnie says all we need is 1 per month! (And that’s more than I sometimes want to do!)Not all Community Owners are wise to the fact that they should be taking advantage of this opportunity. Many could care less. Thats where we come in, as we always have, to fill the void, the niche where others fear to tread.
So we may need to raise our sights just a bit on what we are willing to pay. Yes, we can get some great bargains, but I guarantee you, even if the Lender is down, now is not the time for us to kick them in the teeth on prices. We can afford to pay more that let’s say a regular street retailer, who has to pay to teardown and move to his lot, then to set up again, and a commission to resell. Looking at this angle AND negotiating with the community owner saying, I’ll leave the home here rather then pull it out, even though I’m asking for free site rent, at least it the home is here and it shouldn’t take as long to find a paying customer. If it’s vacant, you just don’t know.
I realize more than most that many markets are tight, and it may be hard to get this done, (I lived in one for the last 6 years, but it’s changed like it always done.) That makes it even more imperative to hop on it today!
So in conclusion, visit your MH communities, especially the ones with vacancies. Don’t waste time with the ones that won’t play. If you haven’t taken the local MH Lender inventory control manager out to lunch lately, get it done. Ask them how many they’ve got in your area and what you can do to take them off their hands. Dont expect to steal them, but of course don’t expect to pay full boat, after all we are providing a valuable service. (And cash is screaming louder these days to many of them than it was in the past)