PLEASE HELP WITH LONNIE DEAL!!! - Posted by Jason

Real Estate Investing Mobile Homes & Mobile Home Parks
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Posted by Jacob on March 15, 2000 at 09:48:30:

Hey John,

I only wish every deal was that easy. Man, I would write that book a few people have been bugging me about. :slight_smile:

I think there are several reasons for this one, however. One, the fact that I am in a large city, and by default a larger number of buyers in general. Two, a pretty good ad on this one in the Thrifty Nickle. And three, the most important factor was a terrific relationship with the park manager. I’ve talked about it before, how I had avoided this park for the last 6 months but was pleasantly surprised when I actually went in there. They made it completely easy.

My goal is to have a check in hand within 6 weeks if the day I purchase it. That doesn’t always work, of course. But, it generally does and makes it easier to move on.

Jacob

p.s. I will be in Ft. Wayne on the 23rd for an hour or so. Beyond that, if people want to get together there one night, that’s cool with me. Just let me know, as it’s only about 2 hours from me.

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PLEASE HELP WITH LONNIE DEAL!!! - Posted by Jason

Posted by Jason on March 13, 2000 at 11:12:23:

I have deal that I am looking at right now. Have a seller of a mobile home, he is actually a mobile home broker, a 1970 model already setup in a park. He is wanting $6,000 for the home, but he has somebody wanting to move into it and they have been quoted a price of $8,500. And they have $2,500 to put down. I asked the broker why he just didn’t owner finance it and he said that they do not like to do that and that is why they just want to sell the home. To me, $6,000 seems like a lot of money to put into a 1970 model, but if there is already a buyer willing to pay $8500 for it, I don’t know. Is this deal worth pursuing? Normally I would say no, but since there is somebody ready to put down a huge down payment and move into it, I am thinking that maybe there is something here. Please Help!! Thanks!!

Jason

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Re: PLEASE HELP WITH LONNIE DEAL!!! - Posted by CAREY_PA

Posted by CAREY_PA on March 13, 2000 at 18:06:01:

Jason,

Make the broker an all cash offer for the home and make it a figure that you can live with and not have to worry about if you’re paying too much.

He’ll either go for it, tell you no and sell it to someone else, or tell you no and call you later and tell you yes. Whatever way he goes, just make an offer and go out and find another mobile home. There are tons out there, if he says no, just go find another.

good luck,

CAREY

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Re: PLEASE HELP WITH LONNIE DEAL!!! - Posted by Lonnie

Posted by Lonnie on March 13, 2000 at 13:18:11:

Don?t know where you?re located, but in most parts of the country, $6,000 is way too much money for a 1970 model. The fact that a broker is handling this, makes me even more leery. From the numbers alone, it might be OK, but look beyond the numbers.

$2,500,or most of it, is probably what the broker pockets for putting the deal together. If I understand this deal, the sales price is $8,500, the broker gets the $2,500 down pmt, and you pay the seller $3,500 for a $6,000 note. If the note pays off as promised, it?s not too bad. But, you just might be buying a MH for $3,500 instead of a $6,000 note. As our good friend Ray Alcorn says “it ain?t made til it?s paid.”

Question…“If you never get the first payment, will you be happy owning the MH? If you wind up with the MH, how much trouble and expense will it be turning that home into the money you have invested, plus a profit?” How well do you know the park manager, and the park. Just be sure and do your home work.

Be careful when buying notes from brokers and dealers. I?ve heard too many people say they wound up buying a MH, when they thought they were buying a note. (I?ll bet you could easily buy this home for $3,500, or less).

Good luck,

Lonnie

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Re: PLEASE HELP WITH LONNIE DEAL!!! - Posted by Karl (OH)

Posted by Karl (OH) on March 13, 2000 at 12:51:18:

Last week I had two very excited buyers for two different MH’s that both said they would pay my asking price and put $1000 down if I carry the note. Five days later, one guy won’t return my phone call (I think he found another home somewhere), and the 2nd guy doesn’t have any hope of getting approved by the park, after talking to the PM yesterday. So now I’m looking for two new very excited buyers. Don’t go into this deal because someone says they’ll put down $2500. Go into this deal only after you do your market research and you have a good idea what your market will pay, then you’ll know what you can afford to pay. If the guy with $2500 falls through after you buy it, you have to be able to sell it to someone else. And $6000 for a 1970 sound like a lot. Will the PM let that home stay in the park? I recently bought a '69 for $700, but I had to move it to another park.

The broker selling the home has probably added at least $1k to the owner’s sell price. You want to find these before they list with a broker so you’re dealing directly with a motivated seller. If this broker can’t sell this home because he’s looking for a cash buyer, and then you come along later after the broker is out of the picture, how motivated do you think the sellers will be if you wave cash at them? I’d keep looking for better deals right now, and call this seller back in a month and see how much his price has dropped. Of course, in the mean time the broker might sell it to someone else, but if its overpriced, then its someone elses mistake, not yours.

Just my opinion.

Karl Kleiner

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Re: PLEASE HELP WITH LONNIE DEAL!!! - Posted by Tim (Atlanta)

Posted by Tim (Atlanta) on March 13, 2000 at 11:32:38:

Let’s run some numbers :

You buy the MH at $6,000.

You sell at $8,500 with $2500 down, financing $6,000. Let’s assume that you charge 12.75% interest for 36 months, giving you a payment of $201.44 per month. You have $3,500 in the deal (6000 - 2500 down). You get a return of 55.50%. Not bad, but most Lonnie deals are much better.

Tell the MH broker you will give him 3000 for it. Now that would be a much better return. He may not take it, but it is worth a try.

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Re: PLEASE HELP WITH LONNIE DEAL!!! - Posted by Jason

Posted by Jason on March 13, 2000 at 13:57:41:

I would get the down payment and I would be the one buying the home, not the note. But like you said $6,000 does seem like a lot for a 1970 model. Since I do get the $2,500 down payment and that puts $3,500 into the deal, is that still too much for a home this old?

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Good Post - Posted by Tony-VA

Posted by Tony-VA on March 13, 2000 at 14:06:45:

Karl is correct. Good post Karl. This is way too much for this home. The fact that a broker is in the deal confirms this. They have to make their money. Chances are, as Karl wrote, this home will not sell for months and they will bet frustrated with the broker. You drop your card (We pay CASH for used mobile homes) on them and you will get the home for the right money (cutting out the middleman).

Remember, we make our money going into the deals. We don’t base it upon the projections of others. We buy based upon our market research, and through our negotiating skills. This deals appears to lack in all of these departments.

Lonnie is absolutely correct. When looking at broker notes, inspect the collateral and pay no more for the note than you would the collateral. The chances are good that you will end up with the home. With some effort, you should be able to buy 6 homes just like this one for $6k. Getting to the motivated seller is what it takes. Keep an eye on this one. Do some homework on it. Talk with the PM and see if the owner is behind on lot rent. Find out why they are moving. The info you gain here will tell you the sellers motivation level and put you in the driver’s seat for the negotiation.

Best Wishes,

Tony-VA

Stick to the motivated seller. Brokers like this are creating more and more motivated sellers every day. Stick closely to lonnie’s book. It will guide you through these deals.

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ONE OTHER THING!!! - Posted by jason

Posted by jason on March 13, 2000 at 12:37:40:

Thanks for the comments. One thing I forgot to mention. I beleive the seller told the person moving into the home that the note would be 0 interest. If I am the one buying the home, I am going to charge a much higher rate. But I am afraid if I do that, then the buyer of the home, might balk on the deal.

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Yes… - Posted by Tony-VA

Posted by Tony-VA on March 13, 2000 at 14:10:39:

…it is still to much. Never look at what you might get as downpayment as if it is your cash. By this I mean, you buy the home with your cash. Do not pay 1 cent more than you feel the home is worth in your cash. What you gain from negotiating a downpayment is your reward for good negotiating, not a means of justifying your overpaying for the home.

Tony-VA

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These guys are so totally right… - Posted by JHyre in Ohio

Posted by JHyre in Ohio on March 13, 2000 at 16:02:38:

make your money going in to the deal. I’ve never paid $6k purchase price on a MH…much less a 30-year old one. In my experience, finding great buys is fairly easy…finding sellers is not so easy. Getting a lousy buy will make selling very painful. Pass.

John Hyre

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Re: ONE OTHER THING!!! - Posted by Skip (Ca)

Posted by Skip (Ca) on March 14, 2000 at 19:02:54:

jason:
That would be a good reason to justify a lower offer to him, right? You can still make a “good enuf” return, even with a 0% note, if the price is right on the buy side.
Skip

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Check out this funky deal… - Posted by Karl (OH)

Posted by Karl (OH) on March 14, 2000 at 24:15:28:

Hi John,

Check this deal out. I looked at an okay ?87 14X70 in a great park, the seller was an older women who wasn?t particularly motivated. She wanted $6000 and would not budge on the price. I was getting ready to walk, so she asked if I would be willing to pay half now and half in 3 months. I didn?t know what to say cause I?m new, so I said yes.

I run an ?I buy, sell, finance? ad in the paper. Yesterday I got a message from a guy who wanted a 16X80 or maybe a doublewide, which I have neither, I almost didn?t return his call. I called him back anyway, cause I have more time right now than money, we talked a little while, he finally admitted he is outraged at the prices for the newer bigger homes, If I had a smaller home that he could put an expando on he would be interested. So he came out and looked at my 14X70, loved it despite the nicotine wallpaper and dog-pee carpet that stinked, agreed to pay $9000 cash for it AS IS, put down $500, contingent on the park letting him expand the home. I called the park today, no problem with the expando, so it?s a done deal, assuming he doesn?t drop dead tomorrow, or decide to walk away from his deposit.

So here is a MH that probably wasn?t worth me paying $6000 for, but the seller made a creative suggestion that made it attractive. If I sell this home for $9000, I make 90% return on my $3000, because I paid one month?s lot rent of $280. And I get to use $3000 of my seller?s money for another 3 months interest free. I?ll try to turn a couple MH?s with it before I have to pay it back. I?m glad she suggested the half now/half later idea, I would have never thought of it. She has become my partner on the next deal or two without knowing it. It was a creative idea that I?ll hopefully use again in the future.

Also, my buyer originally stated he was looking for something that I didn?t have, after talking with him for awhile, I found out he was hot for something I was anxious to sell. Funny how that worked out. I need to stay with the basics, help the buyer/seller figure out what they really need (and hopefully steer them towards what I have to sell!)

This is a deal that I think just fell in my lap, hopefully some other new guys might get some ideas from it.

Karl Kleiner

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Re: Check out this funky deal… - Posted by Jacob

Posted by Jacob on March 14, 2000 at 10:47:18:

Hi Karl,

Good idea. I did the same thing about a month ago. Lady had a 1984 14x70 that she wanted $4500 cash for. I knew a unit like this in this park I could sell for $14-15,000 easy. One problem, I was low on cahs at the time. Paid off a bunch of stuff, etc. So, I offer her $500 cash now, $4500 in 4 months. She says “ok.” Why? Because I asked.

Also, I have paid more than $6000 (response to John’s post) but definitely not a 1970. That’s quite absurd. I bought a '89 14x70 repo for $7500 cash, sold it 4 hours later for $16000. (I could have received more, but I thought this was a good price.) All I did was change the locks and mop the floor. In fact, I was mopping when the lady came by to look at it.

I know, not as touching as an “ugly duckling” type story, but it worked for me.

Talk to you later,
Jacob.

p.s. I still think you, me and John need to get together. I will be in Evansville for a few hours on the 25th, but not sure how that works for you, obviously.

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You guys make me sick… - Posted by JHyre in Ohio

Posted by JHyre in Ohio on March 15, 2000 at 06:27:20:

I GOTTA know how you move things so fast! I got a 1989 2BR Repo in PERFECT shape for $4000- and have sat on it for a month. No big deal, because I figured on sitting on it for 3 months before a buyer with cash (or a large down if I carry) came along. I find great deals to buy all day long- they sell fairly quick (4 to 6 weeks) if I carry…and appear to sit for cash. How do you do it? Or do yours sit for awhile? I do NOT want to hear from Karl(OH)- “Mr. I sell 'em in a couple days for cash”- LOL, Karl!

I agree, we should get together. Are you ever in Ft. Wayne? That seems farily central for you, me & Karl, not to mention some others here in Ohio.

John Hyre