Posted by Tim (OH) on December 30, 1998 at 14:16:29:
Please review the other threads on this site regarding these publications. I don’t think most MH investors put much stock in these publication in valuation of their investments.
Tim
Lonnie Deals in Massachusetts… - Posted by Soapymac
Posted by Soapymac on December 29, 1998 at 20:12:13:
I have a unique opportunity presented to me. I’ll explain it narratively and ask my questions along the way.
A gentleman has an MH he is presently living in…and he wants to buy a small home. He wants to use the MH as a downpayment for the home, but the homeseller does not want to buy the MH.
I’ve got the money necessary to buy the MH. The challenges are:
-
I’ve got no immediate method of doing “comps” on the MH to find out if it is fairly or unfairly priced.
-
I’ve purchased Lonnie’s two books to get a handle on how “paper” works…the idea being that sooner or later, sellers will have to participate in the financing of their homes in order to get their price. The RE agent/broker who understands “paper” will be one step ahead of his competition.
-
I am starting to see a “niche” where young families could use a MH as a stepping stone to purchase their own HOMES…IF a market for their MH could be developed. Even though an MH does depreciate, there COULD be enough value there such that the SALE of their MH would provide them with a good amount of a down payment on a home.
Here are the questions:
A. Is anyone in Massachusetts doing “Lonnie Deals?” Are there any requirements by MA to obtain a dealer’s license? (Try as I might, I can find nothing on the RMV website that even gives a clue. Doing a search on the Commonwealth of MA website doesn’t give anything, either.)
B. Where can I find some kind of source that will give me a guide as to the value of MH’s? (Those listed by RE firms seem to be “stuck” at a sell price of $35K. Prices also vary by the park, too. I’ve viewed a $10K disparity in price on the same MH model between parks that are less than 10 miles apart and the parks appear to be in similar condition.)
C. What are you using for a buy/sell “spread?” Lonnie’s books say “use the principles, and adjust for the numbers.” That’s fine, as long as I have some idea as to what “good” numbers are. Can anyone help me here?
Any help would be appreciated.
Cordially,
Soapymac
Re: Lonnie Deals in Massachusetts… - Posted by DJ
Posted by DJ on December 30, 1998 at 19:51:56:
Soap,
I have to agree with J.P.& others, NADA don’t hold much water! And of course, you’ve got good parks &
bad parks. I have, from time to time, found the local dealer of a particular model I’m looking at, and either
phoned or visited them to find out what it’s worth. Some are willing to help, others are not! Of course
the idea would be to find out what it’s worth to the
bank. They go by the blue book on older models set up in a park. If it’s a newer model, or set up on private lot or both, they will do a drive-by appraisel! Depreciation and overall condition also plays a big part! I don’t know if it will help, but there’s a site you might want to check out. www.usedmobilehomes.com.
These people buy paper on used MH’s, and you may be able to get some additional info from them. I’ve never
done any deals with them, but you may find it interesting! Just some food for thought! Good Luck!
DJ
Re: Lonnie Deals in Massachusetts… - Posted by J.P. Vaughan
Posted by J.P. Vaughan on December 30, 1998 at 08:01:11:
Soapy,
I don’t know the answer to Question A. But I certainly
wouldn’t create a stumbling block out of it. If it
turns out MA has a strict licensing requirement, make
friends with a MH dealer who can “rubber stamp” the
deal for a small fee.
I have answered Question B for you before. The PARK is
a MAJOR factor in determining value. Dirk elaborates
below. Do NOT rely on the NADA book–if you do, you
will pay way too muuch!
The answer to Question C is: How much money (what kind
of yield) do you want to make? If you’ve read Lonnie’s
books, you can see that his sell price is usually at
least DOUBLE his buy price. I always look to at least
DOUBLE the price.
JPV
Re: Lonnie Deals in Massachusetts… - Posted by Dirk Roach
Posted by Dirk Roach on December 30, 1998 at 03:42:09:
Hello Soapy and everyone else in this string,
Okay the organization, with whom you need to contact in the New England area is the:
New England Manufactured Housing Association
3 Wade Street, Liscomb Building
Agusta ME 04330
(207)-622-4406
They Serve Connecticut, Massachusetts, New Hampshire, Rhode Island and Vermont. They can tell you if the Registry in MA handles dealer requirements. I’m not sure who does in MA…They will know.
As far as the NADA book is concerned. L. Scruggs, David Seagers, JP and Terry Vaughan, and all of the other serious Mobile Home Players say that it not only is a waste of time, it gives you a warped since of Value.
I have found this to be true also. What we are talking about is Value. How much will someone pay to live in a certain mobile home. A young family lets say with B or C credit, who wants to restablish their credit, and who has ABILITY (cash coming in from jobs, divorce settlements etc. anything verifiable) and INTENT (a verifiable postive rental history, a need and desire to make consitent and timely payments) will find your offer of finance terms EXTREAMLY valuable.
The concept of Value is something which I learned from my father. He is not a RE person, but rather sells used industrial machinery. Now in his buisness take a bridgeport mill. Nice Machine, new your talking about 60k (for that brand). However say you have a small shop and can’t afford that price and haven’t been around long enough to get decent credit terms. You have a contract to make so many parts a month and the company (lets say Ford) has given you a month set-up time (time to get the machinery to make the parts and time to train someone to run the machine). Now the clock is ticking, you know that if you can’t get going Ford will simply go to the guy down the street. So what do you do? You start looking at Used equipment. A 1963 bridgport mill rebuilt (or rehabed as I now refer to them) for 12k looks pretty good and has Value. According to the Used Machinery and Equipment NADA book though it is only worth 2k! So what should it sell for? Do you take 2k or do you take 12k?
The NADA book for Used Mobile Homes is the same dance.
What it doesn’t take into account is Park Location.
The SAME mobile home value (in my market and it seems pretty much everywhere else) can vary as much as 50% depending on the park that it is in. If your park is in a warzone (and lets face it folks everytown has one today) your MH isn’t going to attract people who are willing to shell out the same money per month that it would if the park is in a nice area with good schools and whatnot.
The mistake I see a lot of Investors make is that when they think of Mobile Homes they immeadetly think of the “wrong side of the tracks and skid row types”. Sure there are less than perfect parks and MH’s, however I have found some pretty nice ones, with veiws and locations which many would be hard pressed to improve on.
Soapy in your above post you mentioned depreciation. I have found this word NOT to have ANY significant factor here in my market. According to the Dept of Housing and Consumer Economic’s at University of Georiga the average life expectancy is 55.8 YEARS WITHOUT maintence! Now when mobile home owners are constantly repairing and improving their mobiles that number just goes on and on.
The Only thing that the blue book does is give New Mobile Dealers a token something (downpayment) which they can apply toward an inflated price of a new home.
The Smart way to find out comps is to know your market, not geographiclly but rather Parkwise. You have to get out in the Parks and research. What Have simimler Mobiles been selling for in Park X? Park Y isn’t in the equation. And neither is Park Z. Only Park X counts. And your only going to get pertinent information (comps) in Park X. You have to talk to people. Park Managers are super (you be ammazed at what they know about the goings on in their park) people who live in the park, mail carriers, anybody who is in that park all the time. Information is power and the key.
I’m sorry Soapy, I hope that you don’t think that I’m going off but I see NADA posts on here a lot and it drives me crazy. We have a nice comunity here and I don’t want people to get ripped off, and if they apply the NADA listing then they are ripping off themselves.
You will pay too much and sell too low by following NADA listings.
Anyhow on the above post you sketched some braod strokes as far as the people with the mobile, is it in a park? How much can you buy it for? What can you sell it for? etc? You might have something or you might not. It depends on the details which we don’t know yet.
I hope that you and everyone have had happy holidays,
good luck and let us know the rest of the story and then we can give better advice,
Dirk
(PS see you in the chat room)
Re: Lonnie Deals in Massachusetts… - Posted by Danny S (GA)
Posted by Danny S (GA) on December 29, 1998 at 22:02:33:
Kelly there is a Guide called N.A.D.A Manufactured
Housing Appraisal Guide that is real good at determining values on Mobile Homes on rented lots and
in parks. This Guide covers all States and uses multiplier adjustments for each State. Its updated 3 times per yr costs around $100.00 per yr Phone#
(800)966-6232.
Re: Lonnie Deals in Massachusetts… - Posted by Danny S (GA)
Posted by Danny S (GA) on December 29, 1998 at 21:54:56:
Kelly there is a Guide called N.A.D.A Manufactured
Housing Appraisal Guide Phone (800)966-6232. This covers all states and has multiplier adjustments for each State. This Guide is real good for determining prices on homes on rented lots & parks its updated 3 times per year and cost around $100.00 per yr for a subscription.
Re: Lonnie Deals in Massachusetts… - Posted by Kelly H
Posted by Kelly H on December 29, 1998 at 20:24:38:
I just bought Lonnie’s books myself and I am now looking for a mobile home to buy. I found out about
dealer requirements in Indiana by calling my local license branch, who gave the dealer’s office # for auto’s since they are dealt with in the same way. The
dealers office told me I could purchase up to 12 w/o a license, but it’s probably different in your state. As for your other questions, I hope someone else answers them, because I have kind of been thinking the same. Good luck, Kelly
Re: Lonnie Deals in Massachusetts… - Posted by Barbara (ME)
Posted by Barbara (ME) on December 31, 1998 at 12:50:10:
I am originally from Mass. and suggest you contact the state’s licensing dept. at the State House. They can tell you in 2 minutes what is required.
Am off to Florida next week until April so my MH deals are on hold until my return.
Happy New Year to all!!
Barbara (ME)