Lonnie deals as easy as they sound? I disagree. - Posted by Jordan (MI)

Posted by Tony Colella on April 13, 2006 at 17:02:49:

Ok, we will prop Karl’s carcus up like a weekend a Bernie’s at that hour but he will be in the bar earlier for those who wish to actually speak with him.


Lonnie deals as easy as they sound? I disagree. - Posted by Jordan (MI)

Posted by Jordan (MI) on April 07, 2006 at 08:01:18:

This post is more venting then anything else. I would just like to share my frustration with my first Lonnie deal with any prospective Lonnie dealers out there, as a warning about what could happen, and a few expensive and good lessons.

Honestly, looking back over everything I can count many mistakes that I made, but it?s real easy to see this in hindsight then it is going into something that you have never done before. I know that I was just too foolish, and too trusting of people which has led me to getting screwed out of lots of money, but I guess I like to think that people are good and ultimately will do the right thing. I do not blame Lonnie, I blame myself. I believe that Lonnie deals work, but I don’t think they are as easy as it sounds.

One thing that I failed to fully realize until now is that Lonnie was an experienced land lord BEFORE he learned the secrets of Lonnie deals. Lonnie, I?m sure, was way more experienced at dealing with people when he started then I was when I started.

So I buy my first Lonnie deal in December. I place an ad in the paper and get many calls. I soon realize that I bought in an area where people don?t really want to live. Many people call, but don?t want to live in this town.

Lesson 1, when you place your test ad, remember to ask people which part of town they would like to live in!

I get so many calls that a few people to come out and look at it. The first couple is very interested, and says they will have the down payment as soon as they get paid. They mention that their employer has shorted them on their last paycheck, but normally this isn?t the case.

Lesson 2, If they mention payment problems from the start, they are only getting warmed up for when they have to make excuses on a regular basis.

I show them around the place, and they look very interested, but I get the feeling that they do not seem interested enough in the details of the place that they are going to be BUYING. I think in the back of my mind that maybe they are treating this as a very temporary rental situation, even though I?ve explained to them that they are buying.

Lesson 3, do not ignore your instincts.

I use Lonnie?s forms and get a credit app filled out, and a deposit. I try to get a credit report filled out on them, and discover that it takes at least 2 weeks to get signed up to do this. PLUS you have to have proof of ownership, and all of this other stuff that takes time. Time while the home is sitting there in your name, costing you lot rent. It?s also very difficult to convince someone that what you are doing is not illegal. In the end, I give into the pressure, and go ahead and approve my buyers, thinking that since the park approved them, it would be ok.

Lesson 4. Don?t trust the park, get your own credit app. It may cost you in the beginning, but Lawyers are not cheap.

As they are giving me the credit report, she starts telling me about her current land lord, and why she hasn?t paid him. She says the place is a dump, and he won?t fix a broken window, or backed up toilet.

Lesson 5. RED FLAG! They will be bashing you some day. Don?t think that since you?re selling them the place that they won?t find some reason to not pay you.

Lesson 6 ? Taken from what I remember from Tony?s course on land lording. Ask them to provide basic responsibility proof. For example, ask to see their ID, and copy down the ID number for yourself. Ask to see proof of car insurance, if they can?t provide this, are they responsible people? Ask to see some paycheck stubs. Are they lying about their income? Tony and Scott have many other helpful suggestions, I recommend their course.

I remember listening to Tony and Scott?s course, and feeling sick to my stomach afterwards from my mistakes.

As soon as I gave them the keys they asked me if it would be ok if they paid ahead of time. She mentioned that she was having surgery done and wouldn?t work for a month, but don?t worry, they were going to pay ahead of time.

Lesson 7 ? Lies. They are promising you double to reassure you that they are actually going to pay. Start learning about court proceedings, and typing your official notice document. They are banking on human greed here.

I send a letter to the park manager requesting my deposit back, informing him that the trailer is now in the names of my note makers. He calls me later saying that he won?t take me off of the lease until the home is paid off. Then I will get my deposit back. Also I need to add the names of the people who are living there to my lease. This makes me uneasy, but I don?t really feel like I have a choice. I?m afraid he will just tell me to move it if I disagree.

Lesson 8 ? Stand up for you here, and don?t let the PM push you around. Although it feels like what you are doing is a little shady, it?s perfectly legal. Make sure that the park gets only them on the lease, and you get out of it. If not, you?re on the hook when they stop paying. The PM knows that your credit is much better then theirs, so he?s going to threaten legal action against you first.

A few days before their payment is due, I get a call and they say that they are going to be late, but they are going to pay the late fees. I become more concerned, and let them know to pay as soon as possible because the late fees accrue by the day. My friends say that it?s promising that they called me to let me know that they would be late.

Lesson number 9 ? Do not think that they are calling because they are going to pay. They are calling to buy more time. The day after their payment is due (during the 5 day grace period) issue an official notice, stating when they will be in default. As soon as they are in default (10 days only!!!), issue another official notice, and file for court action on the same day. THIS IS WHAT LONNIE MEANS BY TRAIN YOUR BUYERS. When they pay, you can drop the charges. Sure it costs more to file then what they are going to pay you, but consider building this into the cost of doing business. They have to know you are serious, and court stuff takes FOREVER.

I call and call to make sure that they know they are in default. I send them certified mail, which they never pick up. I pay them many visits, in which every time I walk away feeling reassured that I am going to get paid, or that they are willing to give me the home back if they cannot pay. I put off filing because it costs a lot of money. Deadlines come and go, and they hide from me. They leave town, fake breakups, lie about having to go to work, don?t answer the phone, lie about their cheap phone service.

She finally agrees (after my Lawyer calls her) to give me the home back. She has seven days to move out. On the seventh day she calls and asks for more time. More lies about a flat tire on her trailer, etc? promises to have the home clean and she will be out in two more days.

On the appointed day and time, she?s left town. We get a hold of her though a work friend. More lies. One more day.

Lesson 10. File in court ASAP. It costs money, but how else are you going to get them out?

She?s supposed to sign the home over in an hour. I have a sinking feeling that I may be in for a court battle, in which I will have to pay lot rent for 2 months (to avoid having my credit ruined) just waiting for my day in court.

When I started out, I wondered to myself, how much could I potentially lose? Mobile homes are a small investment compared to other RE. Yeah. Well, $3000 for the home is just the beginning.

So far, $600 in taxes, ~$1000 lot rent (1 month to sell, two other months to get it back), and $550 for the lawyer, $300 security deposit, which I am thinking I may not get back.

$2450 so far? ($5450 including the home.)

If I have to file in court, it will be 2 to 3 months, (another $1000 in lot rent), $200 or so (low estimate) in filing costs. And the Lawyer will be around to screw me too?

Chances are good then they will trash the home. So another $1000-$2000 to fix it up to sell it again? To hopefully not repeat the same process? Or maybe another $1000-2000 just to haul it away to the park stops threatening legal action against me if I stop paying lot rent.

So I am preparing myself for a total loss. $8560?


So everyone, please learn from my expensive mistakes! I believe Lonnie deals are possible, but it is also possible to lose a lot!

-Jordan (MI)

Wow. Now that’s an eye opener. - Posted by Bill (in GA)

Posted by Bill (in GA) on April 08, 2006 at 11:46:08:

Jordan, thanks for your experience. I’m printing this out and putting this over my desk.

Everybody else who gave their input, thank you all too. I’m busy taking notes.

Meanwhile, my license should arrive next week … here’s to hoping that my first deal is nowhere near this hard!

  • Bill (in GA)

Re: Lonnie deals as easy as they sound? - Posted by Warren(CA)

Posted by Warren(CA) on April 08, 2006 at 24:13:40:

Thanks for taking the time to write this down and sharing it with us. You have taught me a great deal.

Re: Lonnie deals as easy as they sound? - Posted by Tommy

Posted by Tommy on April 07, 2006 at 17:34:45:

I appreciate your insight. I have yet to do my first deal, but I will definitely take it slow and make sure to avoid these issues when I do. I sure hope that you stay with it and apply these lessons to your future deals. The way I see it is that $5000 isn’t hard to recover from and people lose much more than that every single day in the stock market, yet the returns are much less in the stock market. Like everyone else has said, get back on the horse!

Thanks and good luck in what ever you decide.

Dirty Hands Factor Story - Posted by Joe Ponce

Posted by Joe Ponce on April 07, 2006 at 15:11:40:

Hi Jordan,

What you have just experienced is what I call the ?Dirty Hands Factor? of dealing with real estate or mobile home investments.

Let me give you an analogy I use to explain this, except in this case I am going to use a car. It is a bit long but applies to our business in a lot of ways.

You read a book on changing the oil in your car and get some advice from friends. Seems simple right? Dump out the old oil and put in some new. Did the book you purchased on changing your oil mention that your hands can get really dirty? Grease under your nails, banged knuckles, problems reaching the right area?

I?m sure the book does not cover all models of cars, where the drain plug is, how much oil you will need, filter types, if you need to elevate it, location of the filter etc.

So, armed with this extensive knowledge, you head off to the auto parts store 5 miles away to get some oil and a filter. The book says to get a filter wrench as well.

You get to the store and see all these different types of oil. Which is the best one for your vehicle? You ask the friendly store clerk and they tell you to check your owners manual. You don?t have it with you but the clerk states that standard 10-30 oil should be fine for your vehicle. You purchase an adjustable wrench like the book says, a case of oil, the right filter according to the cool computerized box and head home. Time spent 45 ? 60 min.

You get home with your supplies, pull out your tool box and get ready to change the oil.

You decide to do it in your driveway. You try to scoot under the car on your back. Dang, the pavement is hot and there is barely enough room for you under there. You find the drain plug get your standard socket set and climb back under. You try about three sockets and one seems to fit pretty close. You remember you need a bucket to capture the old oil. You get a bucket and climb back under. Dang, the bucket doesn?t fit, it is too tall.

So you borrow one of your wife?s cooking pots and back under you go ready to remove the plug. You put the wrench on, apply pressure but the plug is on really tight. You push really hard and the socket wrench slips and you smash you knuckles on the oil pan causing them to bleed. You try again with the same results and notice that you have stripped the plug. You realize you were using a standard socket when the car is foreign and needed a metric one. Dang the car is dirty underneath, your back is burning, your knuckles are bleeding and you climb out cursing violently because the book made it look so easy.

You climb back under with an adjustable wrench and succeed in stripping it some more. Your back is on fire and your hand is wrapped in a dirty towel with blood and grease on it from smashing it a third and fourth time. The neighbors are wondering if you have lost your mind as you scream at the vehicle while they watch from their porches.

Nothing is going to get the better of you and you climb back under with a pair of vice grips and a hammer. After slipping off the plug twice and pinching your bleeding hand you finally get it on there and wack it a few times with the hammer. Alright! The now-damaged plug finally loosens.

You put your wife?s pot under the plug and unscrew the plug. As you reach the end of the threads, the plug falls out into the bottom of the pot. The extremely hot oil shoots out scalding your bleeding hand and overshoots pot pouring dirty oil down the driveway. You rapidly reposition the pot and demonstrate your multitasking ability by cursing simultaneously as you scoot out from under the car in pain. You hate this car now. What possessed me to buy that dang book and listen to my friends? Everyone made it seem so easy.

OK, you have calmed down, wiped your hands and get ready to climb under the vehicle to get the oil. Dang! The oil has now poured in front of the bucket as you had it positioned too far back because of the pressure. Cleanup will be a nightmare on this one, but you are committed at this point.

Time to remove the filter?you open the hood and try to figure out how this funky adjustable oil wrench works. There is just not a whole lot of room to work with it in there with these cramped engine spaces. Maybe if you tried from the underside?

Hey! After only 20 minutes to figure out the oil wrench you succeed in working it and loosen the filter from underneath the hot car. Surprise! The filter is full of hot oil and it pours down your arm into your armpit. Your multitasking is getting better and you are able to get the filter wrench off quickly, scoot out from under the pouring oil, scrape your back on the hot surface, bang your head, and shout and curse all at the same time. Time Invested?3+ hours.

Wow, the hard part is over. You scoot back under the oil-covered driveway to put the plug in. Oh, yeah, it is at the bottom of the pot of hot oil. You quickly fish it out and screw the cap back in place. You slip a couple of time getting the vice grips around it but you are now immune to pain and in a Zen-like state. At this point, nothing can possibly get worse?

So, you get the filter out of the box and following the directions in the book, put a light film of oil on the seal. No problem finding oil, there is enough in your hair to coat 100 filters. You screw it back on being careful to only hand-tighten it like the book says. Hmmmm, your hands are so slippery and dirty from the oil you are not sure if it is tight enough. Perhaps a quarter turn with the wrench will do it?

Alright! Finally about to finish this up. Thankfully the opening to pour the oil is so large an idiot could do. Well, glub, glub, glub, later and you have succeeded in getting oil on top of the engine. Thankfully your wife has a funnel and you finally finish the job with 5 quarts of oil in just shy of 4 hours.

You start the engine satisfied that the job is over and notice your dirty oily hands are leaving prints on the inside of the car, the steering wheel, and the back of your pants has almost destroyed the seat because it is covered with oil.

You let the engine warm up, check the dipstick and pull the car into the garage. What the @$&*?the engine is smoking like a chimney! Is it on fire you wonder? You quickly back out and run over the bucket of oil in the process.

Your friendly neighbors notice the smoke and come running to help. You hear a siren in the distance?no? they wouldn?t?

Your wife wanders out and hands you your ?Quickly Save Money, by Changing Your Own Oil? book you purchased with a $19.95 oil change coupon sticking out.

After the smoke clears (pun intended) you look at your bloody hands, oily clothes, hair, and car.

The book never said my hands could possibly get this dirty?

I wrote this article a while back but it still applies today.

Jordan, look at this story a couple of ways and apply them to mobile homes. Do you think changing your oil would be easier next time? Would you consider paying for some services rather than doing them yourself? How should you structure and automate your business so that it operates like a quick change oil service? Remember, someone has figured out a way to make money doing this. Your knowledge has grown incredibly from your first deal. Don?t waste it.
Feel free to email me with specific questions. I have done many deals at this point in 4 states and screwed up, down, and sideways more times than I can count. It has paid for itself a million times over.

Keep Rolling?


Congratulations! - Posted by Tony Colella

Posted by Tony Colella on April 07, 2006 at 10:05:01:

Are you kidding, you just received the best training you could have wished for. No book or boot camp could have done you more good.

You made darn near every mistake you could and learned how to handle each and every one. You know more about Lonnie deals in your locale than any other person. You are now the expert in how to fix the problems.

What more is there to fear? You know how to handle whatever is thrown at you. Print and paste your post above your desk so that you can see exactly what can go wrong and how to fix it. Think how well prepared you will be when the next buyer or tenant tries playing games or delaying you.

We all make mistakes Jordan, even those of us who have been doing this for some time still get burned. Usually it takes dozens of deals to make all the mistakes you made (no offense) before we figure out what we have done wrong. You did yourself a favor by getting the wrinkles out all in one deal!

Our success in business and life is how we handle mistakes. You have just paid for your own personal boot camp. To walk away from all that you learned would be admitting failure instead of simply applying your new knowledge to create success.

You should walk tall into any situation that comes your way in this business now. You are battle hardened. Yes, mistakes will be made but the basics are old hat for you now. You have done yourself a favor, yes it was a painful favor but look at it this way.

You have two choices. You can either slowly, painfully, tear a bandaid off or you can give it one quick rip and have the pain over with. As far as I can see, you are like me… rip that thing off and get on to the next deal.

Life is not bruise free and neither is business.


Seminar Paid For. - Posted by Chris Reuman (Maine)

Posted by Chris Reuman (Maine) on April 07, 2006 at 09:49:25:

Thank you for your experience. I know a lot of people will learn from this.

When you are dealing with any real estate: buying, renting, selling on a note, you will have to “dig up the dead bodies”. Over time you learn how to avoid the mistakes. Like I just had a prospective tenant put on her application that her and her husband smoke, but not in their apartment. The only problem is that when I opened the envelope, the smell of smoke almost knocked me over. I always smell the applications. You would be amazed at how many stink like smoke. Now you have to smoke a ton, in a confined area, to get the smell of smoke to cover an application. They got declined. I think one of your biggest lessons was, “train your tenant or they train you”. I have them send the money to my P.O. Box and never chase them down. If I do, they are gone. If people can’t pay, I tell them to go to the town, the state, the Salvation Army, their church, etc. for help. Also, they can get a loan from their friends or family. I’m not the bank. If they can’t or wont’t, then I don’t work with them. Once they cross the line, start the eviction process with a letter, then buy them off. You should have received a downpayment, waive $300 or $500 in front of them to leave now or by tonight. Use Lonnie’s buying technique, " You are obviously not doing well financially, unfortunately, I have to evict you. But if you can be out by tonight maybe I can give you some cash to help you out. How much would you need?" You know your number, but maybe they will come in low. Maybe $200 and they can go live with their parents. I have used this before and it usually doesn’t go high. A lot less than the court costs. Now I know that this irritates you and me, but this is business not logic or feelings. Get them out, learn, and move on to the next deal.

Lastly, you mention your screening was lacking. Never skip this. That is the easiest way to get burned. All the bums in town will get your name from your deadbeat tenant at the local bar, that you don’t check anything. Check credit, work history, income level, past 3 or more residences, how much they bounce around in jobs and residences, and get a good downpayment.

Well, you just went to Lonnie Scruggs University and got a degree in “Lonnie Deals”. You accrued some student loans, so what are you going to do now. Get work in the Lonnie Deal Field or go apply for something else. Hopefully, you use the seminar you paid for to its fullest.

Best investing, Chris

Re:They really are easy…eventually - Posted by JeffB (MI)

Posted by JeffB (MI) on April 07, 2006 at 08:54:54:


Wow, that’s quite a series of events to have to experience on your first Lonnie deal.

I agree with you on a couple things… first, Lonnie deals are NOT as easy as they sound – AT FIRST. They can be a real challenge at first. So many mistakes to make, plus a lack of experience working with people as you mentioned. I promise you, if you learn from your mistakes (read: don’t repeat them) the deals will become MUCH easier the more you do, and much more profitable. Also, even the experienced Lonnie dealer will get burned by a buyer once in a while… BUT, the more deals you have under your belt, the easier it becomes to absorb the impact of an occasional short-term loss. I did a deal in Dec 05 which has been a nightmare, and if it was my first deal I’m sure I would have run away scared, but since I have quite a few notes coming in now it’s really not a big deal. Creating the cash flow gives you lots of flexibility.

IMO, one of your biggest mistakes was not first building a good relationship with the PM. Lonnie says (and I wholeheartedly agree) that this is the key to the business. There are enough parks out there, that there are bound to be a couple that WANT you there. These are the parks you want to work in.

So here’s a question for you… are you going to give up, accept the loss, and move on, or are you going to dust yourself off and try again? Now that you have a good many of the mistakes out of the way, your next deal should be a snap!

Re: Lonnie deals as easy as they sound? - Posted by Anne_ND

Posted by Anne_ND on April 07, 2006 at 08:42:13:


You could cut your losses and just sign the title over to them. They take the tax hit when you 1099 them at the end of the year (this will really hurt if they get any assistance- here’s hoping you got their SSNs). The PM loses all control over you, and you don’t owe back lot rent, back taxes, anything.

Your loss will be anything you’ve already paid, but not another few months of lot rent in a park you don’t want to work in anymore.

Just a thought…


dang, I owe someone else a beer! - Posted by Marty (MO)

Posted by Marty (MO) on April 11, 2006 at 09:29:01:

saving this one for the kid and the newbies that take us out to lunch… If I ever bump into you, I’ll buy you a 40oz PBR (the MO trailer park brew of choice…).



Re: Dirty Hands Factor Story - Posted by Gary

Posted by Gary on April 07, 2006 at 21:21:52:

Had to laugh. Just changed oil in both vehicles today without incident. The reason is experience. Keep headed toward your goals and eliminate your mistakes as you recognize them. There will always be new mistakes to make, the trick is not to repeat.

Hello Joe Ponce !!! - Posted by Tony Colella

Posted by Tony Colella on April 07, 2006 at 20:51:06:

Joe great to hear from you again and nice post (man, they tell me I write long posts). Thanks for the taking the time to share. Folks, Joe is not only the real deal investor and a good guy but a professional soldier who did more than (what was it) 40 lonnies deal FROM Iraq!

Joe take care and be safe buddy,


good to see Joe Ponce again - Posted by Steve-WA

Posted by Steve-WA on April 07, 2006 at 18:02:40:

and you come back with a LOL story like that one.

aint it the truth, bruthah, aint it the truth

this should be on newbie required reading list

Re: Congratulations! - Posted by Jordan (MI)

Posted by Jordan (MI) on April 13, 2006 at 09:21:33:

Thank you, Tony, for all of your encouragement. I look forward to meeting you (If you are going to be at the CRE convention like I thought that I heard you were going to be)


Re: Seminar Paid For. - Posted by Jordan (MI)

Posted by Jordan (MI) on April 13, 2006 at 09:24:28:

Thank you for your encouragement, and your wise words. I am going to try your method of training the tennant as it sounds like a good one.

I was able to get the home back. Now it’s time for cleaning and screening.

Thank you again for your encouragement and wisdom.

-Jordan (MI)

Re:They really are easy…eventually - Posted by Jordan (MI)

Posted by Jordan (MI) on April 13, 2006 at 09:37:46:

Thanks for the encouragement, Jeff,

I am always impressed by this board and the willingness of everyone to share helpful ideas.

I got the buyers to sign the home back to me for some cash, (not before they trashed it – but nothing serious) so at least I don’t have to go through a lengthy court battle to get back a trashed home.

Now I’m wondering, how to get a credit report on a prospective buyer.

I’ve checked out services like Mr. Landlord.com, and they all require things I cannot provide which works for traditional real estate. Such as “Settlement statement or tax stub” I tried giving them my bill of sale from when I purchased the home, and a copy of the title, but that didn’t work.

Do you use the same one that the park gets like lonnie sudgests?

Thanks everyone for all of your help!


Re: Congratulations! - Posted by Tony Colella

Posted by Tony Colella on April 13, 2006 at 09:24:48:

See you at the convention. Lonnie, Karl and I will be at the sports bar located within the hotel at 7 pm on Thursday for any and all that care to join and talk mobiles.


Re:They really are easy…eventually - Posted by osupsycho (OK)

Posted by osupsycho (OK) on April 13, 2006 at 12:41:03:


I currently use the one that the park pulls but have heard that rentalresearch.com is pretty good. You might try that or see if your local REI club has a credit check service as some of them do.


What? - Posted by Karl (Oh)

Posted by Karl (Oh) on April 13, 2006 at 16:30:31:

We have to wait until 7pm to go to the bar?