Posted by Dr. Craig Whisler CA NV on October 24, 2003 at 20:35:08:
Actually, I’m thinking on it. Possibly Sunday for an answer. I haven’t forgotten you Jered. doc`
Is a MHP the next step? - Posted by JeredWA
Posted by JeredWA on October 23, 2003 at 13:26:34:
As Lonnie (and many of his disciples) has stated, the purpose of Lonnie deals is to buildup your cash reserves. Buying wholesale, selling retail, and financing these wobbly boxes is a great way to create monthly cash flow. However, the end game is to buildup cash so that you can purchase longer term investments - like dirt. Once your long term passive income > expenses, the game is over and you have enough “escape velocity” to leave the gravitational pull of your JOB.
I am going to be completely transparent here. I already have $50K cash on hand and a six figure a year day JOB. I too want to quit my JOB and enjoy a$$ time (SteveWA’s name for it), but it’s OK if it takes a few years I enjoy what I am do for a living (mostly).
What is my next move? I am working several Lonnie deals right now (great learning), but perhaps I should instead be focusing on acquiring dirt?
Any insight/advice you all can share is appreciated. And Doc, I will send you McDonald’s money for a Big Mac if you can chime in your $0.02. 
Thanks,
Jered
MHP worst possible decision. Here is why. - Posted by Dr. Craig Whisler CA NV
Posted by Dr. Craig Whisler CA NV on October 26, 2003 at 14:51:38:
If you only have $50k to work with, at first, you won’t achieve enough passive income to feed your dog Spot, at any velocity.
What kind of ROI yields can you expect from parks? 20%, 30%, 40%? Good luck. At current cap rates you will have the only two-spaced mobile home park in town.
Don’t get me wrong, I LOVE mhps. Its just that they are more of an end game play. Your $50k is great too, but its just an ante to get in to the game, at this point in your mobile home investing career.
I recommend doing noting else but straight Lonnie deals until your capital reaches $500,000. The reason is so simple. With Lonnie deals you can expect to earn ROIs of 100%-200% and more, sometimes way more, like Steve WA with the recent math problem post. Such returns are the norm rather than the exception with Lonnie deals. If you only have $50k to work with you need to work it much harder and earn more than the passive income returns that you can expect from a park.
The bottom line is that you can reach terminal velocity much faster at 200%/yr than maybe 30%.
30% of $50k is $15k per year income, pretax. If you live on that what will be left over to invest. If you invest that what will be left over to live on.
Doesn’t make any difference in your cash flow if you put $50k down on a $500,000 mhp, after debt service, you’ll still be working nights for a janitor service.
Stick with the tried and true Lonnie model. If you are good, you’re $50K will be fully invested in 6 months and you’ll soon realize that you still don’t have nearly enough catital for your first 50 deals.
Don’t do mobile/land package deals either, at first. They are a kind of hybrid between Lonnie deals and MHPs. They are part passive income (the land) and part Lonnie, when you flip the mobiles and keep the land. This would be a better play when you reach half-time.
First 2 quarters do Lonnie deals, mid-game do land/home packages, end game do (properly-priced) mhps.
Regards, doc
Re: Is a MHP the next step? - Posted by Howard
Posted by Howard on October 26, 2003 at 11:12:05:
As Lonnie says “it is a gold mine,” but that does not mean the gold falls in your lap. You have to MINE it and mind it. One of the biggest problems is that sellers think the park is worth more than it is. Sound familiar? Like Lonnie’s MH sellers? You need a motivated seller. Hard to find in broker’s offerings. With the amount of cash you have, you need to do some legwork and find some mom and pop operations, elderly and want to get away from it all. You know “been there- done that.” Sellers who haven’t read Lonnie’s or Edward Tew’s books and don’t know how to increase the cash flow!! The other group of sellers is the ex-stock market hot shots, who thought the returns come in just sitting and watching CNBC. Now that the stock market is rebounding, they might be looking for a “game” with more action. In summary, parks are great. Good luck.
Ok, mailing address below. Here is my .02 - Posted by Dr. Craig Whisler CA NV
Posted by Dr. Craig Whisler CA NV on October 23, 2003 at 18:25:59:
You can have my investments.
I want your $100k job. Where do you work?
Would you like to go Super-size for .04 worth? For that amount I’ll sober-up before answering.
:~0
Send remittances to: doc, P.O.B. 12, Cabazon, CA 92230
Regards, doc
YES…if you can handle it of course - Posted by Briton (IN)
Posted by Briton (IN) on October 23, 2003 at 15:33:27:
My MHP is the best thing i have ever done! No questions asked. Not only can you build equity, it gives you a playing field for Lonnie deals. With 50K cash, you are better off buying a park to start with. First, do ALOT of reading on these boards, and read books. (Ernest Tew’s Getting Rich Helping Others). There may be people whom tell you to invest in land home packages or Lonnie deals. But consider this piece of info: I have owned my park for 1 year. I have NEVER NOT GOTTEN ALL my rents each month. Every single rent is accounted for. With the MH on your land, they will almost always pay. If they dont, you get a free home after a few months.
Its a safe investment. It will keep giving to you for many years. You may still be able to keep your 6 figure job, if you get a manager.
Lonnie stated MHPs are “gold mines.”
If you can, then do.
Briton (IN)
Jered, you embarass me - Posted by Steve-WA
Posted by Steve-WA on October 23, 2003 at 14:13:31:
You mention my name and a$$ time in the same sentence . . . why, I hardly even know you!
I love it when a plan comes together… - Posted by JeredWA
Posted by JeredWA on October 26, 2003 at 20:49:55:
Thanks everyone for the input (especially Doc). Your wisdom and experience are much appreciated.
I like this plan: “2 qtrs of Lonnie deals, 1qtr land/home packages, and finish the game with MHPs.”
It is especially reassuring that I can always lean on you guys to help me get through those first few quarters of the game.
Hopefully, I can help contribute something back to all of you.
Thanks again guys. Time to hit the streets - err, dirt.
Jered
By the way… - Posted by Dr. Craig Whisler CA NV
Posted by Dr. Craig Whisler CA NV on October 26, 2003 at 17:16:14:
… that $100k income will help give you access to enough borrowed money that you should be independent of you job in about two years, if you do Lonnies deals first.
I don’t normally recommend that people new to this business borrow their starting capital but this is a little different. You already have your starting capital and you have a high enough income that borrowing more (AFTER your first 20 deals or so) would not pose such a high risk. Don’t borrow anything until you have done many deals first, so you will know what you are facing and you will know if you can succeed at it.
It will be MUCH easier to buy that park, ultimately, with a six figure income, than if you are unemployed. Thats what many banks call us investors—unemployed, especially if we earn more that the lending officer.
I’d wait until after you get your first park before giving up that job and all that income, for the life of a poor investor.
Quitting your job too soon, will stunt your financial growth, not speed it up to terminal velocity, so you can quit. The longer you keep it, the sooner you will be able to do without it (sic).
I think I was a bit extreme in my first post saying wait until you have $500k before buying your first park. If we all did that noone would ever get their first park. $200k would probably be OK if you still have your job and a little more if not. I’d consider buying a park sooner if I got a real killer deal, and later for a more average deal.
Regards, doc
Re: MHP worst possible decision. Here is why. - Posted by Howard
Posted by Howard on October 26, 2003 at 15:22:54:
Doc is right. The 50k won’t get you very far, but you are working some Lonnie deals now. This is a GOOD time to be thinking about the future. With the 6 figure job, you should SAVE, SAVE, SAVE. And be looking for a park for the future. It took me over a year of looking to find the first park. Going over the financials and trying to figure out how you can improve the cash flow that the owner in ways that the current owner has overlooked is an important skill and will not be learned overnight. It is also better to buy a park when you have access to “day job” money if you have some unexpected expenses. There always are some. I am not suggesting that you could or should buy a park tomorrow, but planning ahead is never wrong. Good luck.
Ready to supersize that Doc… - Posted by JeredWA
Posted by JeredWA on October 24, 2003 at 12:25:01:
…if you can give the supersized answer.
I have read a lot of your posts in the archives and really respect your insight, experience, and investment wisdom.
Any thoughts you can share regarding my situation would be most appreciated.
Jered
P.S. And I really will mail you some McDonalds bucks for your efforts.
Doc - $100K a year jobs aren’t all… - Posted by JeredWA
Posted by JeredWA on October 23, 2003 at 18:56:27:
… what they are cracked up to be. The stress and pressures of maintaining a healthy work/life balance are challenging.
That is why I want to have the ability to break the dependence on a JOB and spend time enjoying life. There are a lot of things in this world more important than engineering the next version of some stupid product.
Any serious input/advice is appreciated…
Jered