Posted by Steve-WA on August 03, 2007 at 16:15:08:
when I first met Lonnie, I thanked him profusely (like everyone does), and mentioned that I wished there was a better way to repay him than the measly thirty bucks. And here is what he said:
Help somebody else to see what you see now, help them to fix their own income.
I take that to heart, and I mentor freely where I think I can pass along my experience.
Call me anytime
360-265-1619
Pls help a newbie: is this a deal? - Posted by Kazi (GA)
Posted by Kazi (GA) on July 31, 2007 at 07:01:34:
Experts,
I looked at my first my mobile home yesterday; it’s a 1987 Vintage 3 bed 2 bath 14x70 mobile home in Atlanta suburb. The couple that owns the home was asking for 9500. It needs a lot of work:
Lots of siding damages, skirting damages, needs new gutter, doors, bathtub in the main bathroom, new doors, kitchen faucet, plumbing issues (spotted few leaks), central a/c but the cooling does not work so they have 3 window units for it etc.
Interior was nice though, nice kitchen, appliances are only 2 years old. They started out asking 9500, then quickly dropped to 6500, then asked me toward the end how much I thought the price was. I couldn’t give them a price because I was not sure if I should make an offer or walk away from this one. (Told them that I was going to get back with them). Then the guy asked if I thought it was 5k. I think they will drop the price further. They are very motivated because they are moving and are paying rents in two places.
I don’t know how much to offer because I am not really sure whether I will need to fix some of these things to a do a Lonnie deal. I would need to hire help to do the fix up. What would you do with something like this? Would you still make an offer given all the work it needs?
I appreciate your suggestions and guidance.
Kazi
Re: Pls help a newbie: is this a deal? - Posted by Anne_ND
Posted by Anne_ND on August 01, 2007 at 06:55:26:
Hi Kazi:
Don’t buy this home. I suggest you get inside every home you can for the next few weeks, and visit as many parks and park managers as you can to get a feel for the market.
This park allows residents to have siding and skirting damage- a bad sign. You want to buy in a park that is going to appeal to as many responsible people as possible- i.e., people who pay their bills and keep their homes nice. They are less likely to buy a nice home in a run-down park.
In addition, this MH has electrical and plumbing expenses. With the right handyman, the plumbing can be done very reasonably, but the A/C issues can be very costly- I know because I just took a home back and had to repair the central air- it cost quite a bit of money. But in GA you will have a tough time selling a MH without central air.
Another issue you have is with the age of the home. You probably cannot move this home because it’s over 7 or 10 years old (I forget the Gwinnett Co. rule). So you’d better really like this park if you buy an older MH.
Here’s the biggest point: when you’re ready to buy (after you’ve seen a dozen or so MHs), you first stop should be the park manager’s office. Find out if they will let you do Lonnie deals. Most of my best deals came from MHs that were not even for sale yet, but the PM told me about them, and paved the way for me to buy the home at a reasonable price.
good luck,
Anne
Re: Pls help a newbie: is this a deal? - Posted by rise2it (VA)
Posted by rise2it (VA) on August 01, 2007 at 24:46:06:
Kazi,
You have a basic concept of what a lonnie deal is, but are missing all of the finer details.
By chance, have you bought/read the books? (The answers to your questions are in there.)
Education is the key to anything. $30 for a book is a bargain, especially when you’re investing potentially thousands of dollars.
Trust me, you’ll learn more in 2 hours with this book than you will in ANY college class (and no college class costs thirty bucks).
Don’t cut corners in the wrong place.
What you need to consider - Posted by Chris - NC
Posted by Chris - NC on July 31, 2007 at 13:15:54:
You HAVE to know what repairs will cost BEFORE you agree to purchase a home at any price. You also have to know if the park will work with you, if there are taxes owed on the home (seller’s responsibility to pay these NOT yours) and if there’s any back lot rent owed (again, this falls on the seller). Then you HAVE to know what your market is for the home ie: what can you sell it for on a note.
If you haven’t been working the business long enough to know these things, then find someone in your market who does know them, decide whether this is a deal or not and go from there. If it’s not a deal, then you need to get out and look at 25 to 50 mobile homes, see what’s out there, see what they’re selling for, etc., then you’ll have a place to begin for the next deal. Also start finding out what repairs REALLY cost, materials and labor.
What to fix to make it a Lonnie deal are generally as follows:
First, can it be legally inhabited? (are there any code violations, major problems, etc., that would prevent you from selling, etc…)
Second, does everything work that’s supposed to? If it’s broke, what will it cost to fix it? (Plumbing, electric, appliances, heat/ac, etc. Know this before you buy.) If you buy the house, then you have to fix these things.
Third, does it look clean? If not, what will it take to make it look clean? (Usually 5 gal of Kilz and maybe some inexpensive floor covering takes care of this.)
Fourth, though this should actually be first on your list… is it a SAFE place to live? What’s the environment like?
Once you’ve got all these things in your favor, and the price is right, then it’s a Lonnie deal. That’s not to say that some repairs can’t be passed on to a buyer if they’re willing to do some work for a reduced price. Rarely does this work out to be a good thing for you though, cuz a lot of times they’ll promise the moon and then once they move in do absolutely nothing, or possibly even tear it up worse than it was trying to fix it when they really know nothing about repairs. Other things such as holes in the walls or worn carpet are a judgement call, you can fix them but in your market you may not need to.
I’d suggest you try to find someone in your area doing Lonnie deals and/or something similar and hang out with them as much as they’ll let you. Work for them for free if you have to, to pick their brain and learn the business. In the long run it could very well be the best education you ever received.
I can honestly say that some of the most profound changes in my way of thinking and looking at deals and this business came during casual conversations while I had a paint roller in my hand. From there everything changed!
Just my .02
Take care,
Chris
Re: Pls help a newbie: is this a deal? - Posted by Steve_AZ
Posted by Steve_AZ on July 31, 2007 at 08:24:13:
Hi Kazi,
I would not make an offer, that’s not to say I wouldn’t buy this one. I would find out just how much money the seller needs to move and offer that amount plus maybe a few bucks.
Remember, they have to sell, you don’t have to buy.
Now to the repairs, if you don’t have experience estimating your repair costs you could get yourself into a moneypit that sucks up all profit and then some. Find a handyman that’s familiar with mobiles, walk the home with him and get an estimate on repairs. Then add 10%.
Siding, doors, skirting and gutters are all simple and straightforeward repairs.The bathtub and plumbing repairs can be very costly. Whenever you do plumbing repairs there are almost always unexpected and costly surprises.
Do you know what you can sell this home for?
The purchase price added to the rehab costs should be 50% or less of the price you can sell this home for.
I hope this helps you.
Regards,
Steve
Re: Pls help a newbie: is this a deal? - Posted by shawnsisco
Posted by shawnsisco on July 31, 2007 at 08:20:28:
Sounds like $1250, but cheaper is better.
Re: Pls help a newbie: is this a deal? - Posted by Kazi (GA)
Posted by Kazi (GA) on August 01, 2007 at 07:18:27:
Hi Anne,
Thanks for the helpful tips about the local market! It continues to amaze me how selflessly helpful the investors on this site are!
BTW, I have heard from a non-reliable source that a home older than 10 yrs old cannot be moved in Gwinnett county. Haven’t had a chance to verify it though.
Kazi
Re: Pls help a newbie: is this a deal?–KAZI9GA) - Posted by Garrett-BC
Posted by Garrett-BC on August 02, 2007 at 10:15:33:
“Trust me, you’ll learn more in 2 hours with this book than you will in ANY college class (and no college class costs thirty bucks).”
hyperbole?
Re: Pls help a newbie: is this a deal? - Posted by Kazi (GA)
Posted by Kazi (GA) on August 01, 2007 at 06:07:27:
Actually I have read the Lonnie books twice, second time with a highlighter. However, I am so new to this that I am bound to miss things. Please point out what details I am missing. Thanks.
Re: What you need to consider - Posted by Kazi (GA)
Posted by Kazi (GA) on August 01, 2007 at 06:43:33:
Chris,
Thanks for taking the time to lay down the steps for me. This is going to help me out a great deal. This one seems to have a lot of plumbing issues (owner bragged that he tweaked the plumbing, another warning sign!) in addition to other major problems. I think I am going to pass this one and find something with fewer repair needs. I was hoping that I could try to finance it “as is” with a discount price, but clearly this is not the candidate.
By the way, how do I find out if any tax is owed?
Thanks again.
Kazi
Re: Pls help a newbie: is this a deal? - Posted by Kazi
Posted by Kazi on August 01, 2007 at 06:16:47:
Steve,
I think I could get 9k to 10k from this mobile home. The home across from this one sold for 10.5k and it was apparently in pretty poor shape (it looks it from outside).
This is a silly question, but how do I go about finding a handy man that is familiar with mobile homes? Is the park manager a good resource for this?
Thanks for all the help. I appreciate it.
kazi
Dear Kazi: - Posted by Steve-WA
Posted by Steve-WA on August 01, 2007 at 13:56:35:
you need to get you some reliable sources.
Hmmmm . . . how do I find out about taxes . . . perhaps the county tax collector?
How old of a home can be moved in this county? Hmmmm . . . ask the county? Start with the tax collector, they can point you in the right direction if they arent the ones with the answer.
You need to be more proactive in finding out what you need to know - though we LDers all want to help you succeed, dont take our anonymous word for anything - verify everything with the correct authorities.
DOW gets you started, but it is not everything you need. You need an inquisitive attitude, and a challenging slant to get the info you need for a particular market.
Re: Pls help a newbie: is this a deal? - Posted by Anne_ND
Posted by Anne_ND on August 01, 2007 at 07:36:55:
It’s either 7 or 10 years. Which significantly reduces the value of the MH.
A
Re: What you need to consider - Posted by Dowdyrich (NC)
Posted by Dowdyrich (NC) on August 01, 2007 at 12:11:51:
Hi Kazi,
Chris is absolutely right… I think the most important thing is to make sure the park will work with you, otherwise all that other information will be irrelevant. Then I would continue to find out the details (taxes, back lot rent, etc.)
I am not sure about your area but here in NC, I always call the county that the trailer is located and give them the address and they normally tell me it up-to-date or if they owe back taxes.
But it would really beneficial to (going with Chris again) find someone’s brain to pick in your area. Like she said you HAVE to know the cost to you for repairs and what you could sell it for. Knowing that info gives you a stronger leg to stand on when negotiating the price, as does back taxes and lot rent.
Picking someone’s brain or having a mentor can potentially save/make you thousands of dollars; and it can also save you from getting your Master’s from HKU (Hard Knock University). Be blessed.
Richard Dowdy
Re: What you need to consider - Posted by Kazi (GA)
Posted by Kazi (GA) on August 03, 2007 at 07:11:39:
Hi Richard,
Thanks for the advice. I am working to find people in my area who wouldn’t mind mentoring me (for a price of course). Also, I do realize that the park manager is the one of the most important aspect of the whole investment strategy. However, I didn’t talk to the park manager in this case because this was my very first attempt to look at a mobile home; I wanted to gain some experience before talking to the managers so that I don’t sound amateurish. Many here have suggested that I look at many homes before trying to buy one, and thatâ??s what I plan to do.
Thanks again.
Kazi
Re: What you need to consider - Posted by Dowdyrich(NC)
Posted by Dowdyrich(NC) on August 03, 2007 at 10:31:54:
Hey again Kazi!
Oh I know exactly how you feel … lol… I was in your exact position a few months back. When looking for a mentor, you don’t necessarily have to give them cash… Maybe you can help them in some way. Maybe rehab work, web site design or anything you can do to help them… even helping them to find deals for a comission of some sort; that would also help you see more homes and maybe make a little more cash too.
When I started a very good friend and investor let me work with him as he repaired and financed some of his own deals to help me see the entire process and things to watch for. After a few it was time for me to drop my training wheels and go, lol! But I helped him as he helped me. And talking to the park managers isn’t a bad idea still, you can learn a lot from them as well. I would also just keep in touch with the people on this board they can all help us. Good investing. Be blessed.
Richard