Posted by Don(miami) on December 25, 1998 at 13:30:14:
Doug,
I have to agree with you that the best notes are the ones you creat yourself. i had a firend that was always doing this in the siding business and he had about $1500 in payments coming in each month. i was too greedy i always had to have the cash payment. but as i look back and believe me i have for quite some time now …ha ha. i should have done some financing myself.
I have a friend that is getting into the home improvement business in s.c. and i advised hime to finance deals whenever he was able to.
if he gets enoug down to cover the cost of materials and labor and some profit. then he will be o.k. of course that is my opinion.i agree with you when you say yield and profit dont mean a lot however if you have a good strong yield and profit then you can afford to lose a few whne they dont pay.
as i said in my first post to you. If you are going to finance these type of deals. then i would take ff the tounge of the home and underpinn the home in brick(added profit) and it give you a stable foundation. the home are considered fixed to the land. and an investor will buy it more readily if you need to sell. i would attach the home for security and get some down payment and well as everything else that i said earlier.
also if you can pull a credit report on the payor and charge them accordingly .
talk to an attorney in you state and ask him the particulars and i am sure you will do great. keep in touch and ;et me know how it is going.
MH Note Idea. Any siding contractors here? - Posted by DougO(NM)
Posted by DougO(NM) on December 22, 1998 at 10:40:57:
Called several siding contractors looking to get vinyl siding installed on a rental MH we have, none would do it. Ended up buying the material myself and having a resident who is a contractor do it for us. I called an out of state friend who is in the business and he said the only reason they usually won’t do a MH is the financing is hard to get, and also the metal sided units are usually alot of work as they find they need to remove the metal, install plywood or osb, then start the siding job. I was thinking ALA Lonnie that there are a bunch of these older homes out there that could benefit from new siding, windows, decks, etc. and chances are that they are pretty close to paid off if they aren’t free & clear. I would have no problem financing them as long as I could lien and hold the title, it would be a great way to create a bunch of little notes for the IRA. Any reasons why this might not be a nice little sideline business ? What are the pitfalls of the siding business ? I’d like to know what kind of margins are “normal” in this business to help decide if the numbers make sense. Thanks
Doug,
As well as being a Re Investor, I also own a small
construction company. We have done several MH’s with
vinyl siding, including a few that I purchased for
resale. Most MH’s are framed with wood. The older ones
with 2x2’s in some cases, and most of the later models,
'78 & up are 2x4’s. If you use a 1/4 foam underlayment,
(The Big Companies call it insulation although it only
carries an R1 rating), nail it up w/2" roofing nails,
(this is to smooth out wall), and then put your siding
up w/2-2 1/2" nails, It makes a nice job, and saves alot of labor! The key is to be sure to hit the studs
all the way down! They should be on 16" centers, if not, try 24" centers or follow the screw lines! The metal siding is just thin aluminum, and the nails will go right through it! As far as a Shingle roof goes,
you can not add a shingle roof to a MH in North Carolina without building a Post & Girder system around it to support the weight! That is code here!
I suggest you check with your local Code Enforcement
office before you do one to see what they require!
Most older Mh’s walls will not support the weight!
One other note, this one I learned the hardway!
If you plan to purchase MH’s and fix up to sell,
watch your bottom line as far as how much you put into it! No matter how much you do to it, it’s still a mobile home, and you can quickly end up with more in it than it’s worth! Banks & finance companies usually don’t do appraisels on MH’s, they go by the Blue Book!
So even if you’ve created the Taj Mahal, it’s still only worth blue book to the bank! Best of Luck!
Re: MH Note Idea. Any siding contractors here? - Posted by Don ( Miami )
Posted by Don ( Miami ) on December 22, 1998 at 20:55:28:
Hi Doug
i was in the vinyl siding business for about 3 years and i really never had a problem contracting the mobile homes to do work for them. to be quiet frank it was always a challenge to get the job financed and done because the home ALWAYS looked better when i was done than when i started.
the key to getting them financed was to remove the tounge of the mobile home and to underpin the home with brick giving the home a permanent foudation.
once i did that it was never any problem getting the work financed.
we also would add a pitched roof to the home and build from there. we did not have to remove any metal . but maybe your friend did things different. whatever it takes to make the home look nice… right?
if you do these things to the home then i am sure you have made the property a safe investment as long as the payor is good. and you still have plenty of equity. if you have any questions feel free to contact me anytime.
Re: MH Note Idea. Any siding contractors here? - Posted by Doris - Va.
Posted by Doris - Va. on December 22, 1998 at 15:16:55:
Doug
I think you have a pretty good idea for a side
business in mobile home improvements. People who
have a good quality home and have taken care of it
and now own it free and clear are excellent
prospects for upgrades. These people go not want
to take on the big payments for a new house. They
like their location and their home and have the
money for siding - window replacement - decks -
interior remodeling etc.
These are not the here today and gone tomorrow type
and would be good candidates for short term
financing.
My only objection to your plan is “getting liens or
holding titles”. I have had a new hvac unit
(financed with the contractor) and a new shingle
roof replacement and paid cash. I would not have
considered for a moment allowing a lien or worse
still - giving someone my title to hold.
If you do your homework first - you will find
plenty of people - many who are quite well off -
needing or wanting repairs and upgrades and well
able to pay for them.
Hope this helps you. Best of luck and Merry
Christmas and Happy New Year!!!
Re: MH Note Idea. Any siding contractors here? - Posted by DougO(NM)
Posted by DougO(NM) on December 23, 1998 at 19:05:29:
Thanks for the info. RE: putting nails into the thin metal, isn’t there a good chance that the nails could come out unless there was some “meat” behind it like a stud or furring strip ? (I’ve seen it happen with the top rail of skirting)Would sheet metal screws be of any help ? Thanks again for your input.
Re: MH Note Idea. Any siding contractors here? - Posted by DougO(NM)
Posted by DougO(NM) on December 22, 1998 at 23:24:45:
Thanks for your reply. On the metal homes do you have to put furring strips on over the metal siding ? I wouldn’t think that sheet metal screws would be sufficient if there wasn’t something to bite in to. As for Pitched roof: I was thinking about 2x4 frame with pro-panel metal and putting some insulation in as we do it. What kind of roof did you find worked the best ?
Need for collateralization ? - Posted by DougO(NM)
Posted by DougO(NM) on December 22, 1998 at 19:29:09:
Thanks for your comments. Since my idea here was to create a bunch of little notes, the only way I know how to secure myself and/or my investors is if I become the lienholder on the title. I’m certainly not opposed to cash deals, (VBG), though that doesn’t give an IRA an opportunity to buy the paper created via the financing. I would anticipate these improvements to run in the range of $3,000 to $8,000 and would consider going out to 60 months or so with an appropriate down payment. I am open to ideas on how to secure these transactions. Thanks again, Doug
Re: MH Note Idea. Any siding contractors here? - Posted by Don(miami)
Posted by Don(miami) on December 24, 1998 at 18:57:34:
Hi Doug,
yes we did fur out the mobile homes before we installed the vinyl siding and your idea on the roof sounded good too. If you have the opportunity look up texas aluminum they have some nice well insulated prefab roofs that are energy efficient too.If you need the number i will be more than happy to give it to you, just let me know.
in one of your other post you are asking how to secure the home. are you looking for ways to make the note safe? or what instrument to make the note marketable to your investors ? i am not sure what you are asking but i may be able to help you if i can understand more.
aslo whenever we did a mobile home we built out the windows and trimmed it up so the j-channel would be flush.
i know these guys may get bored with these deatils since this is a RE investing site but we all learn this way right.
Guys i promise we will not turn this into a “THIS OLD HOUSE” site. o.k.
anyway Doug anything else i can help you with let me know
Re: MH Note Idea. Any siding contractors here? - Posted by DougO(NM)
Posted by DougO(NM) on December 25, 1998 at 09:24:49:
Thanks for your input, I appreciate it. As for the technical details, I’m sure that as we go along, (if I decide to do this), I’ll be giving you a shout ! As for finances, there are several issues. As far as I’m concerned, the siding, windows, decks, etc. are just a vehicle to create paper, that just happens to be applied to a product, (MH), which is the industry I am most involved in. I do think that this may be a good business opportunity, but I’m personally not interestd in a full time job. I’d like to get it set up and going, and let someone else do it ! Jimmy Napier once said that the best notes to buy are the ones you create yourself. Why bother looking around for notes to buy all over the country if I can create some locally ? (It also provides work for others and helps upgrade our local MH Communities) I started out following Lonnie Scruggs stuff, and from that I learned to secure myself with the title when working with MH’s. I also learned that I could spread out the risk by putting the Money to work in a bunch of small deals that creates alot of small, short term high yield income streams. I think that the biggest thing that alot of investors forget is that when it all comes done to it, we are really in the "collection business. Yield and profit don’t mean squat if the income stream stops. If a person decides not to pay for the job we’ve done on their MH, we need to be sure that we’ll re-coup some how. If we should ever want to sell or assign that paper, the investor will want to be in the same posistion. The other issue is working on homes in parks owned by someone other than our selves. As lien holder, we ultimatley are responsible for that home, and if the home owner bails or doesn’t pay the lot rent, we get to do that too. So I believe that the best option for us if we are going to finance is to be able to lien and hold the title to the home, and if we need to, perhaps advance some additional $ to pay off the home if it’s not too much so tha we can GET the title. A Retail Sales Installment agreement with cover the sale, and conform to state law, which will then let us “assign” that paper if we need to. What are your thoughts on the financing and collateral fo rhte financing ? Oh, and don’t worry about the contents of the post, “this ole house” material comments aside, if this isn’t basic investing 101, I don’t know what is ! Remember, “it’s just another way !” Thanks, Doug