Info on buying repos - Posted by GregVa

Posted by Tony-VA on February 17, 2001 at 16:00:06:

Basing these purchases upon blue book is what got the finance companies in trouble to begin with. If they could rely upon blue book sales, they would not have 54 repos they need to unload to this one buyer. The blue book is merely a single tool in the craft.

Blue book can be a guide for those who do not know the market. I suggest that local investors become experts in their market and rely less upon the opinions of others. A home sold Lonnie style will sell based upon the terms. A home sold blue book style will sell based upon the credit worthiness of buyers and their ability to obtain 3rd party financing. I would suggest that with todays market, and 54 repo’s in this one deal, 3rd party financing is less and less a reality.

No matter how you invest, making money going into the deal is vitaly important. Knowing your exit plan, price and terms is next. Combining the blue book approach with Lonnie deal terms can be fatal to an investment career.

Certainly there are many mobile home investing approaches. Yes, some will need to be supported by the blue book. Selling the notes you create will be based upon blue book to some extent. But if you bought based upon your best ability to negotiate, instead of blue book, I suggest that you will still fare better in the deal. Blue book may be higher than reality for a quick sale. If you purchase price is based upon a blue book opinion of value, you may find that you pay too much. Knowing your market and the terms it will accept is a safer bet in my opinion.

How does one determine what their market will accept without previous experience? Blue book seems a logical choice. In fact, if I were purchasing notes on homes outside of my area, I would consult the blue book. I would not solely rely upon it for the note purchase of course but use it as a tool.

To learn what your market will bear, take a look at what comperable apartments are renting for in the area. Say a two bedroom apartment rents for $600 a month. I would gauge my sale based upon this price. If lot rents are $300 a month, I would shoot to sell my homes for $250 per month for say three years. My competitive advantage would be home ownership for less than they pay in rent. Own in three years. Why rent when you can own?

I would also ask the park managers what people are paying to rent homes in their parks. I have found that for some reason, these rental prices vary widely, even within the same park. Many are above the apartment rate as private owners capitalize upon a market rejected by apartement landloards for credit etc. They charge these people a premium in rent.

Many of these people have established themselves in the park and as such, are already park approved. This is a ready made market for that park. I advertise that they can buy a home just like the one they are renting and do so by making monthly payments that are LESS than what they are paying to rent that home.

Find the niche and ask what it is willing to pay. Get the answer straight from the horses mouth. The blue book is a historical market summary and has its place. It can be very useful, depending upon your buying and selling strategy.


Info on buying repos - Posted by GregVa

Posted by GregVa on February 16, 2001 at 20:58:49:

I need some advice on things to look for on buying repos. I haven’t talked to many of you since the Atlanta seminar. Been busying getting rid of some deadbeat tenants! I noticed Blane saying something about repos in a recent post and I figure Tony has probably had some experience with them. I just had a possible deal offered to me to buy a large number of repos(54) . All are said to be in good shape and the oldest is a 1988. I’m meeting the guy tomorrow to get keys and paperwork to inspect. All are in parks and I was told only about 15% will have to be moved. I’m sure I need to talk to all of the PM’s to make sure they can stay and about back lot rents. Are there any other things to look out for? Like maybe past due taxes or liens. I’m also wondering about some different ways to do this deal for tax purposes.Maybe John Hyre can help me with some ideas on that if he reads this post.Any advice will be greatly apprieciated.
Thanks in advance,

Re: Info on buying repos - Posted by Tony-VA

Posted by Tony-VA on February 17, 2001 at 13:27:31:

Hey Greg,

I have purchased a few bank repos from different finance companies. Most of mine were homes that were either on the wholesale list or simply forgotten.

I think you are on the right track so far. Most of the due diligence will be the same as a typical Lonnie deal. The added caution I would add would be the time it takes some of these companies to actaully provide you with a title. Some seem to feel that a couple of months is business as usual. I disagreed to say the least. Just make certain that they don’t get your cash until you get the title. If you are looking at such a large number of homes, they should be understanding and willing to work with you.

The negotiating may differ from a traditional Lonnie deal. You are not negotiating agianst emotions. You are negotiating against red tape. Low ball offers are acceptable here. Some of the homes will have bottem line numbers that the finance company will simply not go below (at least not for several more months). You may well be able to discover the particular numbers on the particular home once you get to know the company contact. You should build in extra holding costs, cover back lot rent, taxes, electric, lock changes,cleanup, rehab, advertising etc. and a nice, healthy profit. You may well face cost overruns and when buying in bulk, a minor mistake in calculation, compounded by multiple deals can be painful.

Build in some safety space when you make the bid. Then go from there. The company may want more on a particular home but less on others. Negotiate as best you can face to face. If it becomes a paper/fax exchange only, I suggest you go low ball.

Good luck Greg,

Keep us posted.


Re: Info on buying repos - Posted by joe–ga

Posted by joe–ga on February 17, 2001 at 14:44:54:

If you are not to good at looking and pricing ,get you a blue book for mobile homes.Also the mobile home merchandiser magazine can furnish you with interesting articles.check your nearest sales lot for a contact # for the magazine.Thanks and good shopping Joe —Ga,