I've been asked to invest . . .due diligence? - Posted by Lisa in Oz

Posted by Lisa in Oz on April 06, 2000 at 15:23:52:


I’ve been asked to invest . . .due diligence? - Posted by Lisa in Oz

Posted by Lisa in Oz on April 06, 2000 at 13:59:24:

Sorry if I spelled diligence wrong.

I’ve been asked to invest with a guy who is a MH wholesaler/rehabber.

What should I be asking him and what should he be willing to show me?

Credit report?
Bank statement?
Letter from bank?
Business report?
Business contacts?
A cholesterol test?

Oh, BTW, he had two investors but both have died in the past six months. I’m thinking jinx here.

Thanks for your thoughts.

Lisa Charles

Re: I’ve been asked to invest . . .due diligence? - Posted by Eric C

Posted by Eric C on April 06, 2000 at 15:36:44:

Hi Lisa -

I would agree with everything that Dirk says in his post, but I would like to add a point or two.

The most important thing I look at when sizing up a business partner is their track record. Or, to put it another way - do they perform? Can you rely on them to do what they say? Have they done so in the past?

Most of the time, these folks won’t have much of a bank record or a credit report. There’s no harm in checking and you may find out something (sometimes very bad) that definitely influences your decision one way or another.

Earlier I used the word partner. Please note that I used that term only in its most liberal sense. In no way would I get myself involved in these deals (with anyone else) as anything other than the investor(banker) or the dealmaker.

Make sure your agreement, if you insist on one, allows you to choose whether or not to participate with them on a deal by deal basis. You may not always like what they present to you. Don’t commit your money until you have the facts.

What’s best for me is usually to fund the deal AFTER its completed, signed, and delivered. If I’m going to advance funds for anything other than a pure asset, whether paper(the note) or the item itself, such as the MH, I’d probably be better off doing the WHOLE deal myself. But that’s just me.


Eric C

PS - notice I did say what work’s best for ME not anyone else. Although some out there in CREO may think I suffer from a multiple personality disorder, I assure you that I do not argue with myself and lose. At least, not often.

Investing and dealing with Mobile Home Investors - Posted by Dirk Roach

Posted by Dirk Roach on April 06, 2000 at 15:06:30:

Hi Lisa,
Having been on both sides of this fence, I have to tell you that MH investing can be extremely lucrative.
One of the great things about being the “Check Writer” is that the headaches (or fun, depending on your viewpoint) of dealing with the myriad of details (PM’s, mh sellers, buyers etc) are on someone else’s plate.
That being said, myself, if I do business with someone I want to know as much about a particular deal as possible. Just because I know the biz, and I might see something my “partner” doesn’t.

From the side of someone who uses investors, I would suggest getting with your legal person(s) and determing what type of contracts work will work best etc.
Also I feel that it is a good idea to let people know a break down of that park. For example, I always include a censes breakdown of the area, and a demographic (extensive) breakdown of the particular park; number of spaces, breakdown of single and double wides, average age of homes, 6 month to 1 year sales records of homes, in the park. Managerial history etc.
Also verified buyer info sheets etc. Which tells the investor who is buying the home, their history and most importantly if they have the two most important qualities that a Mobile Home Buyer should have:
ABILITY: Do they have the means to handle this particular deal (a breakdown of all living expenses).
INTENT: Do they have a “track record” of paying their bills. If someone has 15 evictions, they most likely do not have an intent of paying me, and then the investor. One of the most important questions to ask a previous landlord is, “would you rent to them again?” And I feel should be asked of every potential Mobile Home buyer when verifying their background.

Now I’m not saying that is what everyone else is going to do, just that’s what I do. Mainly because as a business I want and get repeat business.

A great book regarding Mobile Home Paper is Cashing In by Terry Vaughan. (which you can pick up here at the sight). It gets into the in’s and outs of MH Paper, how to sell how to buy, and what to look for.

Hope this helps,