Posted by Karl (OH) on October 30, 2000 at 12:58:49:
I agree with Dirk completely. Moving homes is costly, time consuming, horribly aggravating, and it significantly increases your risk. It’s entirely unnecessary. There’s plenty of deals to be made with homes that can stay put. I wouldn’t encourage anyone to tackle a move, especially if they’re just starting out.
I’ve moved a bunch of trailers this year, and I’m going to move a handful more in the next six months. I’m doing this ONLY because I have an arrangement with my PM to help him fill empty lots in a couple parks. In exchange I get free lot rent on all my homes, all the referrals I can handle, got a few free homes, etc., in general I’m getting his complete cooperation and assistance in helping me build my business. But the actual yields on the homes I’ve moved aren’t any better than the ones I bought in place, and they took a lot more time and energy. None of them stand up to a traditional Lonnie Deal (buy 'em in place cheap, double the price, sell on a note). In fact, the more inventive I try to get with my deals, the more I realize the regular old Lonnie Deal is the best thing going. If I weren’t getting these perks from the park manager, I’d never move another home again.
Like Dirk said, Lonnie Deals are short, simple, and easy. It’s easy to make these deals harder than they have to be, I do it all the time. But if you want to get started quick and get some volume going, don’t waste time moving homes.
Posted by Dean Rissler on October 29, 2000 at 20:35:10:
I just talked to several people trying to sell their mobile homes. Please tell me if this could be a good deal and what other information I’ll need to finish it.
Someone has moved out of her single wide mobile home in one county to the neighboring county 15 minutes away. Vacant property is in trailer park but can be relocated(all hitches and wheels available) if necessary. Selling price was $18,000 5 years ago for a 12 year repayment. She wants someone to simply take over payments of $208.36/mo for the remaining 7 years. By my calculations, if we are talking about 84 payments, that will make my total investment $17,502.54. She is not talking about a down payment or anything in equity, just take the payment or give her $14,600 cash so that her mortgage is paid. Lot rent is $290/mo including water, sewage, trash removal and snow removal. Washer, dryer, and central air are the improvements she has added. I still have to look at it. She says it is in pristine condition. I imagine I should contact the property management to see which other motivated buyers are trying to sell and to see if the management would be willing to work with me for future deals. It sounds like she has paid the bulk of the interest for me. What I would like to do is explore the possibility of taking on those payments. Would the mortgage have to be assumable?
Would I have to qualify through her lender to generate new paperwork? My credit is in bad shape now with a lot of late payments in my history and I have $19,500 in vehicle loans on my credit statement now. I would like to find a motivated buyer and flip this to them while making $3-$5,000 in the deal. I told her I would call her in 7 days with my answer. I am just starting to look at the CRE Online website. I have not been to any of the conventions yet but my wife and I are excited about making $50,000 in addition to our income with our job now so that we can get totally out of debt.
Terry Vaughn and Ed Garcia, thank-you for putting this web site together and for talking to me on the phone lately. Terry, I hope Atlanta went well.
I look forward to someone’s reply ASAP.
Here’s to success!
Dean Rissler
Owner of Cleaner Knights(carpet cleaning business)
Posted by Tim (Atlanta) on October 30, 2000 at 06:48:58:
First, have you purchased Lonnie Scruggs’ material? It is available on this site, and I would say that it is required reading for anyone who is going into the MH business.
Second, you are putting the cart before the horse. If you have not talked to the park manager yet, you need to do that NOW. Make sure the home can stay on the lot. Ask if any improvements must be made to the exterior of the home.
Now to look at the deal: Payments are 208.36 per month, and lot rent of 290 per month. That gives the MH owner a total monthly expense of 498.36 per month. Is this comparable to apartment rents in the area?
As far as the loan information she has given you: 84 months left on the note, payment of 208.36, principal balance of $14600. If I plug that into my handy HP 17BII, the interest rate comes out at 5.29%. I think we can all agree, that is most likely not right. Go back to her and get the exact terms of the note. What rate, how many payments left, remaining balance and payment amount. Verify those with the lender.
Have you done the market research in your area to know what this home should sell for? Is this the first home you have looked at?
I don’t think there is a deal here, but I could be wrong.
I Agree, tough deal for a newbie - Posted by Dirk Roach
Posted by Dirk Roach on October 30, 2000 at 11:07:14:
I’m with Tim.
The cart is way, way before the horse.
And I think I will risk the wrath of Karl OH, but don’t even think about moving the homes, when starting out!!! It’s an expensive, pain in the neck process, which should be avoided at all costs.
I have moved a couple, and got gray hair doing it. Karl, has had better luck than me. I have yet to lose money doing it, but man what a pain.
Okay as for the described deal. Just for argument sakes Money can be made with this type of deal. As Tim pointed out, if the market will bear it, you could throw on the difference in the monthly payment. i.e. Add 50 bucks or whatever it is and put that in your pocket. Or you could try to cash out of the deal, and attempt to get someone financed.
Thing is, here are the if’s:
a.) if, the park will let you sub lease the home. Most won’t.
b.) if the Mortgage company will let you assume the loan. Most won’t.
c.) the amount left on the note is significantly below the market, for a quick sale. Most won’t be.
d.) can you get find a qualified buyer, remember in cashing out, you are now competing with all the new dealers, and brokers, etc. in town.
also you are dealing with banks, they will have to be happy and willing to take the risk.
Anyhow this seems like a lot of hoops to jump through myself, but people are different and have different thresholds of pain and anoyenance.
Myself I like the Lonnie deal. Short simple, and easy.
Good luck hope this helps
Dirk