Posted by DC (IL) on June 18, 1999 at 10:09:52:
not take a step further until you’ve educated yourself a little using Lonnie Scruggs’ helful materials. He covers these questions and then some.
It is not recommended that you get into moving MH’s for your first few deals…as a rule.
Lonnie Deal - Newbie needs help fast - Posted by Joe H
Posted by Joe H on June 18, 1999 at 09:20:59:
While looking for my first deal I have found a
'79 Trailway 14x70 MH that needs alot of interior work.
The park only wants $999 but the home has to be moved.
The park manager says that they are forcing out all of the older homes to make room for new units.
Has anyone heard of parks forcing out older homes?
Is this home worth moving? If I have to move it my Index
goes way down.
Cost - 999
move - ~1500
fixup - 500
Any comments would be greatly appreciated.
Joe
Sure happens all the time - Posted by Dirk Roach
Posted by Dirk Roach on June 19, 1999 at 08:34:46:
Hi Joe,
some parks do have a ten year limit or some such limit. Why do they do this, and mess up all of us Lonnie people? Well the answer is pretty simple. The newer homes can be financed by conventional lenders (i.e. Greentree etc.), and they look a lot nicer.
Both of these are motivating factors for the park. Conventional Lenders are perhaps a little more stringent in their acceptance of people. A person going through a conventional lender may have to have a little more solid credit than you or I might except. Why it this important? It makes the park a more solid asset. If say I owned a park and was going to refinance against the park, I might get a better rate because my lender would feel more comfortable. As people with better credit pay on time etc. Also If I wanted to sell my park I could ask a higher amount for it. I simply have a more “sellable” item.
The reason for “nicer appearing homes” could factor into all of this also. But mainly I have found that when these nicer looking mobile homes have began to fill up a park, Rent increases can be psychologically justified.
A lot of people/companies which buy a park and began to “rehab” it do this (out with old and in with the new) by simply setting up a deal with a manufactured housing maker, or dealer. What they do is get a couple of Model homes into the park, and show these. Then simply take orders. Often times the deal is the models go into the park for free, so long as they (the maker or dealer) can tie the park up. It really works well for both parties.
So were does this leave us Mobile Home People? Let me say that these parks, I have found can be a good source of product. I personally sell “pull-out’s” all the time to folks who have their own land and want to put a mobile on it. I just sold one to a ranch owner who needed a home for his ranch hands.
Also I have a partnership which I have formed with a fellow who is located in Mexico. I am in a border area so this is a good market here. Once you get a little experienced though, moving these homes can be an option.
Personally in my market I have no problem putting 3k (your above scenario) into a Lonnie deal. In my market I know what I can turn that 3k into. And which note buyer will be interested in that particular note if I should decide to sell it. Different MH note buyers, I have found, are interested in different criteria. Age, seasoning, etc.
But Lonnie is correct, moving a MH (or doing anything for that matter) can be a painful experience if you don’t know what you are doing.
As far as finding a home for these older Mobile homes, that should not be that difficult. It just may take a little looking. Believe me there are parks out there that will take an older home. An empty lot is a thorn in a park owners side.
You just have to find a park which allows older homes.
Good Luck,
Dirk
P.S. In my market I sometimes charge certain parks for getting rid of their “junk” $300.00 dollars or so, or concessions for my homes months free space rent on homes that I buy etc.
Although you have to know your parks as some will just donate the homes to a charity for the tax write off.
Also a couple of weeks ago I was given 3 homes in a park that wanted them out. Your $999.00 sounds a little high. The park by their own rules have put themselves into a corner.
Re: Lonnie Deal - Newbie needs help fast - Posted by Tony-VA
Posted by Tony-VA on June 18, 1999 at 20:02:20:
I too would suggest that you pass on this one for now. I have enountered parks that are phasing out older homes. You will find many other homes that you can purchase and sell in the park without having to move them. The home that has to be moved will most likely stay there because most investors don’t want to move and most buyers don’t want to (or can’t) pay fix up costs plus moving, plus new lot rent, plus deposit, plus insurance etc… Do some other deals the tradional Lonnie way. I bet in a few months that home will still be in the park. You may even be able to pick it up cheaper since they will have lost those months of lot rent and will prefer to just have it removed.
Good luck,
Tony