Need Options! - Posted by Debo

Real Estate Investing Mobile Homes & Mobile Home Parks
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Posted by Ryan (NC) on June 02, 2007 at 18:00:26:

And I thought paying 7300 for a unit that fetched 14900 was bad… There ain’t much of a profit margin in your deal! As Tony says, the value of each deal is in the eye of the beholder but I want to caution you against one thing.

What IF you can’t find a cash buyer and the home stays on market for 4, 5, 6 months all the while you are eating 200-300 in lot rent and say 100 in advertising? You are now are in it for nearly 15k which leaves you MAY BE 1-2k in profit and who knows how much stress during this time. Ok the cash buyer ain’t coming along, do we drop the price and take a loss or do we finance the home to someone with 1k down and payments of 250 month? If we finance the sale our return would be roughly 16.5%. Not bad but you can get that type of return buying partials from folks that are in the business and know what they are doing. Using options eliminates a lot of the risk but if you take title there are other things that can go wrong like being forced to move it! We make our money on the buy and collect when we sell or rent!

If we take that same 13k and buy three units for 4300 each that we can sell for 10k each and collect 500-1000 down where do we stand? We have three units each bringing in around 250 per month ($750 total), 2250ish in down payments, and our return jumps to right at 80%. You’ll notice the payment amount didn’t change, that’s the main problem I see with over paying for a unit, there tends to be little difference in the monthly rate you can collect between a 15 year old unit and a 5 year old unit.

Lonnie writes the perfect model in black and white and many people want to start changing things right from the get go! WHY? You have a proven model that has been tested across the country and been proven many times over to work! Follow the advice Lonnie has written and it’s really hard to loose money, think you are smarter than a master who has done deals for years and years and I promise you’ll get burned!

It really ain’t hard folks, you just have to get out there and do it! =)

Best Wishes,
Ryan Needler

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Need Options! - Posted by Debo

Posted by Debo on June 01, 2007 at 19:47:43:

Just new to this business, in fact have not completed deal #1 YET. Was a good week, placed an add in a free newspaper and got a tonne of calls. Guess this really could work!

So, here is my situation. Called on a home last week, 98, 3/2 14/76 in a really nice park. Seller was asking 18,000. Not a Lonnie deal by any stretch. So, i told her that i would not be interested for that price. Before we hung up, she disclosed that she really needed to sell, and would take the payoff for 17K. Still too much, i said that I would be looking to pay 12K. Said, if you can find 5k, call me back.

4 days go by and i get a call from her. She can come up with 4K, so i could by for 13K. She stated that she has had several people offer her 10K cash for the home.

So, i call this park owner who was looking for newer homes for his park. He said he would be interested and would pay about 14K.

So, 1K in my pocket for first deal, I’ll take it. Turns out the home is too big for his park.

So, i call the park owner to get lot rent and such, he states that he doesn’t want the home to leave the park and wants it to stay. PERFECT, I’ll wholesale to you for 14K and be done.

Well, he is no longer calling me back, so time to move onto another plan. I called the paper and placed an add for this w/end offering finance hoping i may be able to get the 10K buyers back and carry note for 3K. I’m ok with 3K exposure for my first deal. The people offering cash, have several family members in the park.

So, i may or may not get lucky with these buyers, i do NOT want to deal with a $500 down buyer and finance have a 12.5K note.

Please offer any suggestions anyone has to make this deal work.

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Re: Need Options! - Posted by Ruben (KCKS)

Posted by Ruben (KCKS) on June 03, 2007 at 07:52:59:

Repeat after me. I will follow Lonnie’s book to the letter. I will only buy a home where I can double my money prior to interest. I will not be a motivated buyer.

Please go back and reread Lonnie’s books 2 more times and then go back and look for a deal again. Right now you do not understand the concepts of a Lonnie deal if you are satified with a 1K profit and are counting on “getting lucky” with a buyer since you do not want to deal with a $500 down buyer.

Good luck

Ruben

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Re: Need Options! - Posted by Anne_ND

Posted by Anne_ND on June 02, 2007 at 04:48:32:

I would be very certain that you are able to do this in the park where the MH sits today. You may have trod upon the PMs toes a little too hard when you first tried to sell the home by moving it out. Be certain he/she will work with you on approving buyers, etc.

BTW, $1000 is waaaaay too skinny for profit. You could lose that amount in a heartbeat when the seller takes the C/A with them, or it turns out there’s back taxes or other fees owed that you didn’t know about. Or a recent home that I got back where it was infested so badly with cockroaches that the appliances had to be replaced so that my buyer would follow through.

From your post I’d suggest you re-read the book.

Anne

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then an Option is what you shall have! - Posted by Steve-WA

Posted by Steve-WA on June 01, 2007 at 20:21:51:

go to ernesttew.com and find the free downloads, use his MH option form to lock in a purchase price (adjust the form a little, as it is written for Florida)

Pay the seller a $100 option fee for the right to purchase at 13K, then go find a buyer. I wouldnt give up on the 2nd park yet, talk to them in person, find out if it is still possible.

Tell us where you are - 13K MHs may be a good deal, or a waste of time depending on your market. But we can’t easily advise you without knowing at LEAST where you are dealing.

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Re: then an Option is what you shall have! - Posted by Debo

Posted by Debo on June 02, 2007 at 04:17:31:

Thanks for the tip. I am in NC, kannapolis to be exact. 13k for this home is a fair deal, it should sell to the right person for 16-17, especially in this park. If i can find the cash buyer and then finance the rest, i’ll do that. But, just not sure if a casg buyer would be looking to assume payments as well…

I’ll download the form, this seems to be a really good option, thanks!