Should I move this MH or not? - Posted by Scott

Posted by Scott on September 14, 2003 at 02:32:01:

Wow. Thanks for such an elaborate, informative response. After reading your post I was at once encouraged and properly hesitant. I see I have some more work to do to feel comfortable with this deal. However, if the seller is motivated, I will work this out. Thanks again Doc.

Should I move this MH or not? - Posted by Scott

Posted by Scott on September 13, 2003 at 19:36:16:

I had a lead on a MH for sale. The woman’s grandmother had lived in it but had passed away. She owed $2800 on the home and the granddaughter is asking $6K. It’s an '84 2bed, 2 bath. It’s not worth 6K. To make matters worse the park manager wants it moved. He offered to buy the home for $1500 but granddaughter is hoping to get enough to at least pay off the loan and ideally use any remaining money to pay for the funeral. Manager says he intends on buying a MH and putting there.

After talking to the granddaughter a couple of times she seemed attracted to this possibility: I lease option the home, taking over the payments ($165/mo, 20 payments remaining). I then pay her $50/mo. for 1 year at the end of which she transfers the title to me. Also, I would have to pay to move the home to a new park ($900). So the only money I would have invested up front would be the $900; however, I could probably recoup that money with a down payment from a buyer and sell for $7k at 15% for 3 years. All the numbers sound good to me but this is my first MH deal and after reading Deals on Wheels I’m a little afraid of moving a home on my first deal.
What do you guys think? Any advice would be greatly appreciated.


Re: Should I move this MH or not? - Posted by Doug (Alabama)

Posted by Doug (Alabama) on September 14, 2003 at 08:41:43:

I beleive Doc brought up a very key point. That is she must sell, you don’t have to buy. Don’t offer to pay her anything on a monthly basis after the sell. She will be glad to pay the difference and be out from under the lot rent. Be patient and let her pay a month’s rent and see if her attitude changes. It will become a liability and not an asset to her. Also, Doc also said something really important. That is get the title when you take possession of the MH.
To recap: Get it at your price, get the title at possesion, and no payments.
I had this malady and it was hard to shake but with a deep breath you will find you get the deal on your terms not the sellers. In not…walk.
Good Luck,

Re: Should I move this MH or not? - Posted by John Smith, IV

Posted by John Smith, IV on September 14, 2003 at 01:15:02:

If it isn’t worth 6k, how are you going to sell it for 7K?

There are many profit posibilities here but not if you start with overpaying for the MH.

Re: Should I move this MH or not? - Posted by Dr. Craig Whisler CA NV

Posted by Dr. Craig Whisler CA NV on September 13, 2003 at 23:26:48:

Your plan appears well thought out.

You seem to know what the moving costs are, but do they include the teardown at your present location and the set up costs at the new location? Have you checked to see if the mobile has wheels, axels and tongue? These could represent hidden costs that you may not have thought of. If all costs are included in your figure, fine. The costs seem a little low to me but if you are sure of them go for it.

We don’t nornmally recommend moving mobiles for newbies or anyone else, however I feel that with your moving cost estimate and the built-in seller financing that this would be an exception. Just be sure of the $900 figure

I love your financing arrangement. It may cause you one unexpected problem though. Most parks will insist that your new buyer be on title. You don’t want your buyer to know what you paid for it because you are going to increase the price. If you are making payments to the lady you buy from you would not normally get clear title until you finish paying for it. How then will you be able to put the new buyer on title as will likely be required by the new park? Have you considered this?

My suggestion for solving this problem would be to, have the seller give you clear title immediately and for you to secure your note to her (if at all) with some other item you own, such as your car if it is free and clear and worth the amount of the note. This will solve all of the above problems. Another possible solution that you might try, especially if you have good credit is to ask the lady to take back an unsecured note from you and give you clear title at the outset. Tell her you have good credit and give her a copy of your credit record. If you have plenty of other assets explain to her that she may be more secure with an unsecured loan. The reason being, is that if she uses her mobile home as security, what if you default and she has to take it back and begin paying space rent again? How secure will THAT make her? Also if she uses the mobile for security for your note to her that is all she gets back if you default (There are some exceptions but for the sake of clarity I won’t go into them now). If she takes an unsecurred loan, then she had recourse to and and all of your assets in the event of a default. She just goes to small claims court, gets a judgment against you and she can have the Sheriff levy on any or all of your assets to satisfy her judgment. I don’t know why everyone seems to think that a secured transaction is better than an unsecurred one when the bound party has lots of other assets. It isn’t always true. I am a former debt collector and I know this from my own experience. Anyway, these are some of the arguments you could use to get her to give you the title now and accept an unsecurred note from you. What is her alternative, to just continue paying space rent on an empty mobile?

I don’t see any real need to pay the seller $50/month for a year either. In fact I would ask her to pay me $50 per month for a year, and she what she says. Negotiate a little on this point. She may be in trouble but it isn’t your responsibility to pay for her losses. If she doesn’t sell quick, space rent will eat up her and everything in sight. She has to sell, you don’t have to buy. I think you can negotiate to AT LEAST have her drop her demand for the $50/mo, if not more. Even if you have to pay it, this still looks like a good first deal.

Check to verify that the space rent is paid up and check with the local agency that taxes mobiles in your state to verify that the taxes are paid up. If not ask her to pay them and show you the receipts before you ink your deal with her.

Next consider the problem presented by the death of the original owner. Has her estate been probated, giving the mobile to the granddaughter? Not likely so soon. Probate can be a slow multi-year process. Who then owns it, and has the right to transfer ownership to you? Have you seen the actual title? Whose name is on it? Who is the $2,800 owed to? Is it a bank or other commercial lender? Ask to see the loan documents. If it is a privte party loan, maybe you can get a nice discount for early payoff, if you can afford that option. If it is a licensed lender I don’t think they would want it back. What is it worth?

The debt on it and the moving costs put you right at the upper limit for purchase price, but this deal still seems to have some promise. It will be wonderful experience for you to learn to deal successfully with all of these details and problems. Be persistent. If you want to be successful in this business you will have to pay your dues. This is a great opportunity to do so if all factors check out and you can figure out how to deal with the title problem.

I think many other investors on this board would advise you to give up because there are so many obstacles to overcome. I say that is how you learn. There is still some good money in this deal, and a WEALTH of experience to be gained, and you can do it with little or no out of pocket expense to you personally. Normally this deal would be about 5 times as complicated as a normal deal. If you were my son, just starting out I would say go for it. Learn from it. Earn from it. If you run into problems just come back to this board for assistence. That is what we are here for.

I like your plan, especially because you will be out of pocket almost nothing. You will have payments but with a little luck and quick action you will soon have someone else paying them for you. This coud be almost like a freebie to you. I like that.

When and if you find a good new park to move it to, ask the manager if they will give you a $1,000 move in allowance for filling an empty space in their park and getting it back to profitabililty. You probably only have about a 25% chance of getting them to pay your moving costs but it costs nothing to ask.

The biggest problem that you may not have forseen is that you will need to find a new park that will work with you to get your new buyer qualified for admission to their park. If they don’t want to help you they can drag their heels forever, never approving any buyer you bring to them. Meanwhile you are responsible for space rent, and the loan payments. A slip up here could spell DISASTER for your first deal. This is a commom problem. Be sure you don’t walk into this blindly. If you find a real friendly park manager then go for it.

I might offer the park manager a fee of $100-$200 to help you find a new buyer. You would offer this to him personally in cash, not to the park. I know you can find a buyer on your own. What this is, is really a facilitation fee to get the manager to WANT to approve your buyer because the manager won’t receive the money UNTIL AFTER they approve someone. It is really inmaterial who finds the new buyer but many PMs have people stopping by their offices every week inquiring about moving into their parks. If the PM knows he doesn’t get his cash bonus until someone is approved you stand a GREAT chance that he will work closely with and not throw roadblocks and delays in you path. If this is your first deal, I can’t stress strongly enough the importance of finding a willing and cooperative PM who WANTS you to be in his park. This is 90% of the battle in this business, not simply finding good deal to buy as many begginers would suppose.

The deal looks good, and I am impressed with the thoroughness of your preparation, and your analysis of the deal. Veryify your moving costs, find a friendly park manager and go for it.

Scott I think you have a good future ahead of you in the mobile home business. Welcome aboard.

Regards, doc

Re: Should I move this MH or not? - Posted by Scott

Posted by Scott on September 14, 2003 at 02:29:17:

Thanks for your comment. I guess I should have worded things a little differently. I don’t believe the wholesale, all cash value of this home is 6K, and wholesale is what I want to pay. But retail value coupled with easy financing should bring the value up to 7K pretty nicely. At least that’s my opinion. Again, I appreciate your comment.