option on a MH........could this work? - Posted by Steven(Ga)

Posted by David Alexander on May 23, 1999 at 20:01:04:

It literally depends on the park. Ask the park manager, they can sometimes give you an idea. Went to a park the other day where all the homes are being sold on 180 months, these are older homes that I would normally buy and sell as a typical Lonnie deal for 60-72 months. Also the majority of the time the payments and down are the only things that matter in some parks, and to some people because the home will never get paid off. I ask for 1,000 down and shoot for 500, payment wise I shoot for 225-250. and compute the N (how many months) from there and what I think is fair based on the park, the home and the payor. You’ll ultimately be buying a Mh that you hope you keep getting payments for month after month. Some you’ll get back and just do it again, just the nature of the business.

option on a MH…could this work? - Posted by Steven(Ga)

Posted by Steven(Ga) on May 23, 1999 at 16:10:39:

I stoped by a 1976 14x60 a few hours ago. Looked in the windows. Everything lookes like it’s in ok shape. Lot rent is $85 and the owner wants $3500 for the home. Just one proplem. I have no cash to offer him. The owner used to rent it out but got sick of landlording problems. So I’m wondering if I should offer him the $85 lot rent he would be paying for an option to by at say $3000. Then run out and try to find a buyer to finace and and then scraping together the money to buy it minus the buyers down payment. This will be my first deal so I wanted to run it by the pro’s on this board. Dirk and Lonnie are you out there?

Thanks to everyone

I’m with David here - Posted by Dirk Roach

Posted by Dirk Roach on May 24, 1999 at 05:49:04:

Hi Steven,
I am with David here. The $85.00 space rent made my eyebrows raise, as did the statement “The owner used to rent it out but got sick of the landlording problems”. The reason being is I don’t like my Lonnie’s to be in a park which allows rentals. In my market Parks which allow rentals of mobile homes, bring in people who don’t have the same interest in maintaining the look of their home and space. This translates as a much harder sell for me. When Mr and Mrs. Jones pull up, I want them to fall in love with the park. I want them to fall in love with the Mobile Home. I do not want them just to settle for something for the present time. I want them to be happy. Happy people, pay on their note.
Now as for the option game in Mobile Homes I feel (and remember my opinion and 40 cents will by you a cup of coffee), that it is one of these things which in theory can be done. It looks good on paper, however in a real world scenario most often will fall flat.
Cash talks, we know what walks.
Okay now in your post you state that this Man wants to get $3000 for his home. Now that is an interesting number, why does he “need” $3000?
Also you state that you don’t have $3000 to pay for this Mobile Home. How much do you have to get into this deal (providing it is even a deal)? Where can you find the money, to cover the difference? Who do you know who wants to make a 15% return on a couple of grand that they have in the bank as opposed to the 4% that they are making now in their savings account? A friend or buddy? Maybe a relative?
Have you anyone lined up from existing advertising or a test ad which you have run, that might be interested in living in this Mobile Home, and in this Mobile Home Park, which is 20 miles out of town?
These are all questions which need to be addressed, for this deal to succeed, plus add the ones David Alexander mentioned. Back space rent, current taxes, will the Park Manager play ball etc.
Okay also you mentioned that this would be your first deal. If you haven’t picked up Lonnie Scruggs’s books, do so. Otherwise it’s kind of like trying to get your drivers license without knowing how to drive a car.
Also don’t fall in love with a deal. Don’t get excited or emotional. Look at the deal from all angles, if it is a deal, act on it, make it happen. If it isn’t one, don’t. Spend your time and energy in finding a situation which will be a deal.
Anyhow Steven, that’s what I think, keep us posted on what happens and what you decide to do, Good Luck,

Re: option on a MH…could this work? - Posted by David Alexander

Posted by David Alexander on May 23, 1999 at 16:24:57:

You probably wouldn’t have to put up even $85 dollars.
First things you need to know are…
Can it stay on the lot?
Is the Lot Rent, utilities, etc. current?
Talk to the Park Manager make sure it’s someone workable.
$85 dollars a month for the lot rent, around here that would be a total dive park, is it safe.
What can you sell it for? You have to know that before you know if you should shell out 3k. Have you negotiated at all?

Get a deal structured and then look for the money, if it is a deal you’ll get the money, as long as you ask enough people. If not, what’s the big deal, you don’t give him the money you don’t buy a MH, no further off than you are now.

David Alexander

Re: option on a MH…could this work? - Posted by Steven

Posted by Steven on May 23, 1999 at 16:36:32:

Yes the park is a dive. Dirt/sand roads, older
homes, twenty minutes to town, the works. But a
deal is a deal. I dont know how much I could sell
it for that is why I want to option it. So I’m
only risking my option consideration. The rent and
utitlies are current as far as I can tell and the
mh can stay on the lot. Any ideas on how to find
out its FMV.