# MH deal -- Michael, Dirk, Lonnie - Posted by Mark_TX

Posted by David Alexander on March 16, 2000 at 10:45:04:

Ok, so you added the lot rent (250), seller payment (112), and your payment (200) to come up with a sale price.

What you need to use for your sale price and to figure your own yield is the price you paid, cash out of pocket, how much a month, how many months and calculate for PV.

If you do it the last way I mentioned you yield will better than Good Enough, infinity after they make the first payment and you get that money back.

David Alexander

MH deal – Michael, Dirk, Lonnie - Posted by Mark_TX

Posted by Mark_TX on March 15, 2000 at 23:13:27:

I know the current view on moving MHs, but I would ask that you guys look at the numbers without pre-judging and then provide feedback.

I have a seller willing to owner finance me on her MH. I worked out the numbers and will be paying her 112/mo for the next 36 months at 0% interest and 0 down, for a total of \$4032. I need to move the home to another park, but I still think it is a good deal, because I’m really only out of pocket the moving fees plus one or two months payments and lot rent until I get a buyer, if it takes that long. Moving the trailer will cost approx 1500 then hookups and all the incidentals/advertising about another 500 (I think). So, I’m out of pocket \$2724 counting 2 months without a buyer. Here is the owner finance I am thinking about …

PMT = 562
N = 36
I%YR = 12.75
PV = 16,739.31

I would ask for 10% down, for a total of \$1674.00. Then I would be out of pocket \$1050.00. What do you think? Beyond the moving cost, I am getting this trailer for 112/mo 0 down, I think that is pretty good, and the numbers seem to line up. I don’t think that I am missing anything here…

you need to negotiate! - Posted by David S

Posted by David S on March 16, 2000 at 20:38:09:

with the park manager/owner where the mobile home is located NOW.

Why would you have to move it?

David S

They are “mobile” homes after after all. - Posted by Dirk Roach

Posted by Dirk Roach on March 16, 2000 at 12:31:50:

Hi Mark,
Sounds like a neat deal. At first I was a little concerned about the \$562.00 Payment. but as you later broke it down it down for David A, That sounds reasonable. Remember your average target buyer will “most” likely be employed in either military, service or manufacturing job of some sort. So if you allot under 600 bucks a month for a roof over their heads, I really don’t see were that will be a problem.
Also I see that you have worked yourself in @ \$200 bucks cashflow. Which I think is cool, because you can work that number down if need be, in the sales negotiating side of the sell.
Now as far as moving a Mobile Home…
Let me first say that for the first couple of deals I would advise AGAINST it. However I say that only because you need to become familiar with your product.
That is to say, you need to know the ends and outs of a typical Lonnie type Mobile Home. Really this is two fold, because once you know your product, it becomes an easier sell, because you are confident and comfortable in what your selling (and buying).
The other reason is, you know what will most likely hold up, and what won’t.
Myself, before I moved a mobile home, I actually found the best mover, in my market and did several “ride alongs” with him. I got that idea from the TV show cops. I actually worked for “Free” for him for about a week. Thus I learned all the neat tricks, like emptying the water heater, and taking out stoves, Refrigerators, etc, prior to moving. I also learned all about “jacking” a mobile into place, set up and leveling, cracking one etc.
Also I had the wonderful experience of dismantling a carport and then putting it back together again. Believe me, any time you do that, get ready for some real fun, I never would have guessed that those carports would break down into so many pieces.
Anyhow I did all of this, not because I wanted to get into the Moving Biz, but rather so I would know, what it takes, what’s a fair price, and most importantly how long certain things take to do.
Because the thing with mobiles, is once you commit to the deal, it’s like riding in a cab, the meter is running.
Okay after I learned all of this, I paid someone to do it.
It was like any other hiring any other employee, (accountant, lawyer, contractor, etc.) I simply interviewed one after the other, with and tested them. I also checked credentials, references etc.
Then we moved the mobile home. The first one, like I said was a double wide. This was a chore, because the park it started in was on the side of a mountain, and had a huge grade. We actually had to get a crane involved. This was not a typical Lonnie deal. As it was a double wide, and wound up on an Indian Reservation. That was cool, because of the no permits etc. on the set up side.
The second was a single wide. And what fun that was. The brakes, locked up. I had to search down some tires for it, the space where we went turned out to be 2 feet two short. Oh and the entry angle was all messed up and we actually wound up jacking the back end over like 12 feet. That’s fun at 3 inch intervals.
Inspections weren’t a problem, (although they could have been), however I learned a long time ago, to get involved and make a lot of friends in city and county politics, so you know what to do, what will fly and what won’t.
But it worked out in the end, we handled all the little unforeseen that pop up, just like in any other business deal.
Then I wound up selling the home for cash. That was cool. And it all worked out.
Thing about your deal is just remember to have a slush amount worked into the deal for all the little things that will pop up.
Anyhow hope that helps, and be sure to keep us all posted on how it goes.
I remember talking at the convention to Karl in OH, about one that he moved, I hope that he adds to this thread with his experiences.
Also you know a great Video is the Lew Dickson Video, "Mobile Home Land Development.
I love that video, it really goes into the ends and out’s of moving a mobile home. Of course it focuses on what is involved in Land development (Yet another great money making Mobile Home Avenue) but still you can never have enough information.
Also Lonnie and Ray Alcorn have moved mobile homes, many times.
Good luck,
Dirk

Hey, didn’t see my name! - Posted by Jacob

Posted by Jacob on March 16, 2000 at 10:17:13:

First of all, I’ve never had a quote to move a mh for less than \$3000. Here, I need a licensed plumber to do the hook-ups (I suspect that is true almost everywhere.)

The \$562 seems absurdly high. That is the difference between actual experience and just coming up with figures off of the top of your head. You see, a \$75,000 motgage @ 8% over 30 years is \$550.32.Hmmm, if I had to choose between a \$75,000 home and an old mh it wouldn’t be a hard choice. I would rather rent an apartment (gasp!) then pay that kind of money for an old mh. But, as Dirk has pointed out, people will pay \$365 a month for an abandoned mh. So, you might just get someone to pay what you are asking. I just think your pool of potential buyers will be much smaller.

It doesn’t sound as though you have done many of these deals. You will find that moving a unit is much more hassle than usually worth. Generally you can make as much or more on a mh that doesn’t have to be moved. It’s also much less of a hassle.

Just my opinon, good luck on this deal.
Jacob

Re: MH deal – Michael, Dirk, Lonnie - Posted by David Alexander

Posted by David Alexander on March 16, 2000 at 02:43:00:

Mark,

No matter how you slice it the moving will end up costing about \$2500. If the Mh has to be moved what are the people going to do? That’s when they really become motivated sellers, sometimes you just have to wait it out.

Or maybe it ends up as park owned home and then you might have a deal for back lot rent or just moving it.

Now on to \$562 a month, where’d you come up with this amount, if your market will pay that much I’m moving to Houston, Lol.

Dont forget that the people have to be able to afford Lot rent, Insurance, electricity, water, gas in those total payments, so you have to work backwards to get your figures right.

If the home could stay I’d say do the deal. Have you checked with the Park manager to see why the home has to be moved, might be for some fixable reason, or in some cases the PM’s no longer want that particular tenant, although you keep your mouth shut on that one.

One other possibllity on doing this deal would be to let someone buy this home from you before you move it.

So you get it under contract, find a buyer that is willing to move it, have them sign a note and then have them pay for and do the move. You give them maybe no payments for a month or something. You wrap the financing you have and probably will end up with payments of 200-250 month minus the 112/month, so net result for a couple of payments to your seller you’ll recieve that back in a month, much better yield and less headaches.

David Alexander

Re: MH deal – Michael, Dirk, Lonnie - Posted by michael

Posted by michael on March 15, 2000 at 23:29:53:

Mark: You are absolutely right: do the numbers make a deal that will make you happy. If so, go for it! The ones I have run across have not been worthwhile. The only question I have about your scenario is what is your payoff to your seller? Would you later offer her a reduced cash payoff? Also, get hard figures on setup and connection fees!!!

Dirk, you want it, you got it…(extremely long) - Posted by Karl (Oh)

Posted by Karl (Oh) on March 17, 2000 at 01:17:17:

I just got started in January, but I’ll tell you more than you care to know about my deals that I moved.

In two months of doing mobile home deals, I?ve moved three homes, and I?m having two more moved in the next couple weeks. I know everyone frowns on moving these, but I?m in a unique situation. One really nice park I?m working in has 450+ homes with a great manager who is bending over backwards to help me help him fill some empty spaces and sell some empty homes. The day I met him and pitched him on me working his park, he was thrilled and said he?d only charge me half lot rent on anything I bought or moved in. Yesterday I reminded him that we needed to square up on lot rent on several homes I?m selling, he said to forget about it, just keep selling homes. He?ll collect rent when the owner?s move in. Also, his parent company is in the process of buying three other parks in the area that he?ll eventually manage. So I?m doing everything I possibly can to keep this guy happy. Last Friday night he told me he?d be working late at the office, so I had Domino?s deliver him a pizza. (Good tip, Dirk). When I first started, I was trying to figure out ways to get around dealing with the PM, because a couple PM?s told me to take a hike. Now, I can?t imagine trying to do this business without the PM as a partner. Also, about half of the phone calls I get from my ?I buy, sell, finance? ad are people who want to live in the area where this park is located. I haven?t found any great deals FSBO right now in that park, and I?m finding wonderful deals in other parks that don?t want me around. This is why I?m moving so many homes. I?d rather not move any of them, cause it?s a pain, but right now the money seems to be in the move.

The first home I moved was a ?71 12X60 dealer trade-in in good shape sitting on wheels in the dealers back lot. The dealer called my ?wanted - 12X60 MH cheap to be moved? ad. I bought that for \$700 and moved it for \$1300 to my park. This one was moved on the Friday of the Convention in Atlanta. I met Dirk for the first time that day, and told him I was having one moved as we spoke, he asked if I had drained the water heater so it didn?t fall through the floor during the move. No I hadn?t, I was freaking all weekend that my trailer was all over the highway. Luckily it wasn?t.

That park has several narrow lots that will only fit a 12 footer, so they?ve let me move a couple older ones in. This is when I learned just how much work it is to have these moved. I hired the mover with the best reputation in town who supposedly has 30 years of experience. I quizzed him many times until he hated answering his phone about what was going to happen, how much everything was going to cost, what permits I needed, etc. Plus I was moving it from Indiana to Ohio, which added additional permit costs. After the mover blocked and leveled it and hooked up the utilities, I found out I needed to get a couple more permits from the local building dept and water and sewage dept, then get them to come out and inspect before turning on utilities. Then the skirting. Total moving cost was around \$1800, several hours on the phone, and a week of stress. By the way, this mover was getting really tired of me until I told him Lonnie?s joke about the guy with the cell phone built into his hand. It was the funniest joke he ever heard. (I watched him tell that joke twice, both times he screwed it up, and nobody got it).

The second home I moved was a nice 1987 14X70 I bought for \$4000. I found a cash buyer that agreed to pay \$6500 (not a great yield, but I needed the cash). The home was in a hostile park, meaning the park manager was a jerk. The buyers wanted to live near my pet park. So I told them I could have it moved, if they bought the home from me first and paid the moving costs. So this one was a little more relaxing, because I had already made my profit. I didn?t make a lot on this, but I?m still learning.

An hour after that, I bought one that I?m having moved next week. (I took yesterday afternoon off of work and got a lot done.) It?s a 1996 14X60 in perfect shape. My park manager agreed to pay for half the cost of the move if I bring it to his park. I negotiated a price of \$10k with the seller, contingent on me helping her find an apartment. My favorite park manager also controls several apartment buildings, so I called him. The seller?s not working right now, so she offered to prepay one year?s rent if they let her move in. The seller had never paid property taxes on this home, so I took her downtown, paid \$1600 in back taxes and put the title in my name, took her to the apartment and wrote a check for one years rent to the apartment manager, and gave her the difference of \$2065 in cash. So the park manager gets a nice newer home in his park and gets one year?s apartment rent from a tenant, she gets to move into an apartment she likes and out of a park she hates, and I get the trailer. This should sell for \$16-\$17 in my market, I?ll cash out with my C credit broker. By the way, I brought a partner into this deal who fronted me the \$10k for a share of the profit, so I have no money in this one, just my time.

The last one I plan on moving next month is a 1987 14X60 in great shape. The young couple trying to sell it had it listed for \$8900 with a broker for two months. The seller called my ad right after firing the broker, and after 20 minutes of chit chat, offered it to me for the \$1800 that?s owed on their loan, they just want out. The park it?s at is requiring that a new awning be installed when its sold (almost the cost of moving it!). It?s a Holiday Home park that?s kind of far away, so I?ll go meet the manager to see if I can work in that park, but I would rather just move the home instead of installing an awning. I showed my favorite park manager pictures of it today (digital cameras are very handy), he said he has the perfect lot for it. I?ll eventually have about \$3500 into it, but should be able to sell for at least \$8k or \$9 on a note, maybe a little less if a cash buyer comes around.

So I’m getting really good at moving homes, still need to learn a lot more about marketing, creating notes, and putting my business plan together (Bob McN, please help, I’ll be coming up soon! Just need to find some time.)

Sorry that this ended up being so long. Its 2am, and I?m wired from a busy day, and the busiest eight weeks of my life. Next week I?m going golfing in Georgia, I?ll try to relax then. Go UC!

Karl Kleiner

Better Left… - Posted by David Alexander

Posted by David Alexander on March 16, 2000 at 16:48:51:

for the other guy to pay that much for a MH and still have to deal with moving it. My thoughts were more on if you going to pay that much for a MH you may as well wait for better opportunity and one you dont have to move. If he had to move it and then all the cashflow was his, (his yield would go down to 50% or so) I’d probably say jump on it, (I’m working on getting past my moving phobia). Maybe because like you did I went through the whole process, tear down and setup on these deals and just didnt find it fun. Lining the workers up etc, etc, movers being unreliable at times.

Although a few days ago I was trying to put a deal together on one that I would have had to move, so who knows.

David Alexander

details, details, details - Posted by Mark_TX

Posted by Mark_TX on March 16, 2000 at 09:03:58:

I took what a 2 bdrm apt would be going for here in Houston, then figured the average would probably be around \$500/month. The \$562/month amount that I came up with was a figure including a \$250 lot rent, then the 112/mo to my seller and a 200 cash flow for me.

I checked with the park manager and she says that any home that is over 10 years old, if it is sold, needs to be moved out of the park.

I like your last idea the best I was thinking about writing a contract subject to finding a buyer with qualifiying credit.