MH Investors - Posted by John Lowry

Posted by Karl (OH) on May 15, 2000 at 17:36:48:

How involved is this investor in your deal? Is he a partner who’s going to share the risk and help with all the work of putting the deal together, or is he just providing the funds?

If he’s just loaning you money, keep it simple and just pay him a fair return in monthly payments. 15% is a good return on a nice safe investment, don’t you agree? Your investor doesn’t have to know how much of a down payment you get, or any other terms of your agreement with your buyer. Why should he? He didn’t put the deal together, you did. He’s getting a fair return on his money with very little risk. You’ll be doing all of the work and taking all of the risks, right? You need to be compensated generously for that.

You shouldn’t have much trouble finding investors willing to loan you money at around 15% that’s secured by a mobile home. (Plus you know you’re going to make the payment to your investor like clockwork anyway, to keep the investor happy and your reputation intact, no matter what you’re homeowner does.) I’m just starting to look for investors also, I have several friends waiting to give me money. A guaranteed 15% sure beats a risky stock market investment.

I’m sure some other more knowledgeable folks will reply to this question and give you some more detailed advice. I read a detailed post by Tony VA on another site a few days ago explaining how he uses investor’s in his deals. He structures it so less than half of the MH note payment he receives goes to the investor. Perhaps he might post that information under your question here. Also, a tip Dirk Roach gave me a little while ago was to try to resist being overly generous on the first deal with an investor. If you later decide you’re giving away too much money, it will be extremely difficult to back off on the terms on the next deal, without looking like you’re getting greedy.

Karl Kleiner

MH Investors - Posted by John Lowry

Posted by John Lowry on May 14, 2000 at 24:38:39:

First off, THANK YOU EVERYBODY! I am truly appreciative of all the support here, as well as the positive atmoshpere.

I am looking for investors, I have had two that are dealing with me, one is extremely serious. I am anxious to do this. I have read chapter 6 in Lonnies book “Making Money with Mobile Homes”, about 100 times.

The deal the investor structured is similar, but their are a few differences. He would like half of the down payment. He would like the full monthly payment of the structured note of sale until he is paid off, then would like to split the remaining payments.

The way I would like to do this would be. Split the down, I think I can live with this, maybe. Set up his pay-off for 24 months at his 18%. Keep the difference of the two payments. Then recieve the remainder payments. My question to you wonderful folks out there is, what do you think? Any suggestions would be helpful and appreciated. I am really eager to do this, as I am sure he is too. All things are negotiable. I just want to be fair, and be treated fair.

I guess my biggest concern is what I am going to be faced with. I am continually going through the pros and cons of this deal. I have to pay the lot rent if it becomes empty, I have to pay for any repairs. I have to find the buyers, I have to kick out deadbeats. I realize that this is part of RE. But, I don’t want to end up spending 2500 on a deal of 36 months and only net 1500. Am I being too, outrageous in my thinking? I am just trying to cross my eyes and dot my t’s.

Thanks and I really appreciate it.


Re: MH Investors - Posted by Steve(NY)

Posted by Steve(NY) on May 17, 2000 at 21:39:10:

Hello John,

I haven’t yet invested in mobil homes; rentals are my main thrust right now.

However, I do invest in the market. This being the case, I would love to get 15% return on a secure offering like you described. Don’t give your investor anymore than this unless he/she is taking an active roll in the management.

Best wishes.


Re: MH Investors - Posted by Ernest Tew

Posted by Ernest Tew on May 16, 2000 at 06:34:45:

Karl has offered some good advice and insight. Based on my experience, I think you are offering the investor (speculator?) too much. The most I have ever paid for a mobile home loan is 14%. My suggestion is to keep it simple by offering to borrow the money at 12% to 15% and give the lender a promissory note, secured by a first lien on the home.

In that way, the investor has your personal guarantee and the mobile home as collateral. Keep in mind that an investor’s first concern is safety–not maximum return. If you offer too much, they will think it is too risky.

Make the investment as safe as you can for the investor and then emphasize that fact. Point out to the investor that they will have no liability when making an investment as a loan and not as a purchase.