Posted by will(wa) on April 20, 2007 at 12:14:06:
IMHO - I’d use word of mouth with the PM’s to do that in your favorite parks, but not advertise to the public…because you could be construed as a lending inst. or bank, no?
just my .02,
Will
Idea for an acquisition strategy - Posted by wayne-OR
Posted by wayne-OR on April 20, 2007 at 01:40:30:
I have been racking my brain to think of an additional acquisition strategy and have formulated somewhat of a basic strategy that I think could use more exploring.
The strategies I have now are as follows:
- Buy all cash (at a steep discount of course)
- Get home for free (usually will have to be moved)
- Buy home on a l/o (rare to use this)
- Buy Homes on terms with title and unsecured Promissory note.
- Buy homes with a money partner …also buy homes and then sell partial for money for next deal.
and the one I am thinking of:
I came up with this idea from the stick built strategies of preforeclosures of helping the people stay in their homes by bailing them out and then renting it back to them.
Lets say someone owns a home free and clear and is 3 months behind on lot rent.
We go in and catch there back lot rent up for basically loaning them the money and in exchange we become a lien holder on the property.
We are basically acting like a car title loan place but without the exorbitant interest rates.
So for example…a home worth 8k (assuming no problems).
We pay back lot rent for 1200 and it is secured by the MH.
Then they just pay us on the note we create with them.
UPSIDE: Minimal amount of investment. Do not have to look for a buyer. Do not have to pay lot rent until a buyer is found. A turnkey deal. No carrying costs or repair costs.
DOWNSIDE: Essentially your buyers are the same people that got into financial problems in the first place…what is to stop them from Deadbeating again?? It is a red flag that you will have to evict them soon since they got behind in the first place.
Other things to consider: It may be a temporary financial setback they are experiencing. There have to be Points or a Large administrative fee involved to make the spread on your money loaned and Profit realized to offset if they pay you off early—this may be circumvented with a XX early penalty clause.
Re: Idea for an acquisition strategy - Posted by Mr. H (IN)
Posted by Mr. H (IN) on April 21, 2007 at 09:08:14:
Wayne,
There is a desperate seller in your area right now waiting for someone to buy his home. He is willing to deal and will take just about anything to get out of that home and lot rent. Go find him this weekend and do a deal. If you have questions about the deal you find this weekend, post them and you will get a wealth of information.
I have a seller right now who is desperate to sell her home today. Since it’s too late in the month for me to get this home moved, she will need to come down from her $2200 asking price (this home needs work) considerably to justify me paying a month’s lot rent at $403. If she doesn’t want to come down in price, she has to find another $403 by May 1.
This same person is in OR. Go find her and make a deal.
Re: Idea for an acquisition strategy - Posted by Ruben (KCKS)
Posted by Ruben (KCKS) on April 21, 2007 at 08:38:44:
The strategy of loaning money secured on a mobile home is a very good one for someone you have sold a home to that has a good payment history. This way you know you will be paid back your principle.
The major flaw I see in your model is how will this person who only had to pay lot rent now be able to pay that same lot rent and the payment on your note. More likely than not you will be forced to repossess the home very shortly after making the loan. You will then be viewed by the person you had to repossess the home from as a con-man who swindled them out of their home. This is what they will tell other people in the park and your reputation will start to get tarnished. Now let’s say you pursue the deal in the traditional sense. You buy the home for just the back lot rent saving them from being evicted and having that black mark against them when they try to find another place to live in 6 months (after living with relatives or friends). You are now the hero the white knight who helped them out.
Thinking of new ways to modify Lonnie’s model is commendable but why fix it aint broke? I still read and will continue to read Lonnie’s books every couple of months. Each time I do I notice that I have deviated a little bit from his teaching. Most of the time I will come back in line with that teaching and I increase my profit on the next deal. Stick with the, “Good Books”, as I call them and you can not go wrong.
My 2 cents.
Ruben D. Flores
Overkill - Posted by Karl (Oh)
Posted by Karl (Oh) on April 20, 2007 at 08:34:00:
Wayne,
Why are you “wracking your brain” to come up with more unique ways to buy homes? The list you have already is pletty to get rolling. Are you having trouble finding good deals by waving cash at movivated buyers?
Your last strategy isn’t about buying homes, you’re just loaning money. I don’t see that as a good way to buy homes.
Karl
what I think - Posted by Steve-WA
Posted by Steve-WA on April 20, 2007 at 07:35:45:
Good idea or not, I think that you spend too much time formulatin’ and speculatin’, not enough time motivatin’.
Go do a deal.
Re: Idea for an acquisition strategy - Posted by John B
Posted by John B on April 20, 2007 at 07:22:52:
I tried it, remember to factor in the legal costs of having them removed because that is what you will have to do.
Re: Idea for an acquisition strategy - Posted by Glen (OH)
Posted by Glen (OH) on April 20, 2007 at 05:47:56:
Good idea Wayne. I think you would have to look at it like buying a note. Don’t loan any more than you would be willing to buy the home for. You also need to factor in eviction costs. I think you have a very good chance of having to exercise that option.
I have told the manager in the park I work in to let me know if anyone fit the scenario you mentioned. So far the homes have not been worth what is owed or they are upside down in them.
Good luck on this angle. I’d be interested in hearing if your able to do any deals this way.
Glen (OH)
Re: Idea for an acquisition strategy - Posted by Don-NY
Posted by Don-NY on April 20, 2007 at 06:31:09:
At first I was skeptical. But after rereading it I came up with an extension to that idea by pairing it with an idea from Lonnie’s money book . Advertise in the “thrifty Nickel” that you loan money to mobile home owners secured by the home. You can beat the heck out of the rental stores on furniture, electronics, etc. They could use it like a heloc and you buy the stuff when they need it. You could even pay off a small loan against a home and control it for a fraction of the value. All it will cost you is the ad money.