Posted by RobertR on January 23, 2001 at 16:47:45:
http://www.greenpoint.com/gpcprop/gpc_propertysearch.cfm
and put in your search criteria.
Robert
Two questions - Posted by mark
Posted by mark on January 17, 2001 at 03:42:42:
I gotta admit. Before finding CREonline I never in my wildest imagination would have EVER thought of dealing in MHs. But here I sit, having spent the better part of the last 3 nights going through and reading EVERY MH article and a great many of the posts in this discussion forum. Sounds like a cash cow to me!
I am just getting into REI and have a partner I will be doing SFH flips with. I INTENDED to take the profits from this and buy rental homes… however… now I am considering another option… deals on wheels! 
My first question. As someone who has only thought “houses” up until now, with a SFH you have appreciation, the value/worth of your investment increases, and with a MH you have depreciation, the value/worth of your investment decreases. Now, trust me, I have spent almost every waking hour the past 3 days weighing the pros and cons of SFH renting vs MH notes. I don’t need convinced that that note can probably give me as much passive cash flow per month as I could get with a rental, without the headaches of landlording. My only reservation is the appreciation/depreciation issue. Can anyone address this issue for me and pull me the rest of the way into the wobbly box camp.
My second question. I am just curious, how can someone start in MH notes with NO money, as the ad for deals on wheels suggests? I mean, let’s say you are ready to get that first MH and you have NO money. Even if you find a 20 year old MH for $1000 (we all wish) you gotta have that first $1000. Then, if you turn around and sell it for $3000, take $500 or $0 down and hold a note for the balance you are into THIS unit for anywhere from $1000 to $500 leaving you only $500 or NO money. Either way, you don’t have enough money to buy a second MH, unless you can find a $500 deal. So how could you start with NO money? Again, I am just curious.
Looking forward to the enlightenment you will bring.
mark in ok
Another thought - Posted by Blane (MI)
Posted by Blane (MI) on January 18, 2001 at 07:33:58:
Hi Mark,
As usual Tony has clearly and concisely explained how to work the business in a way that any of us can do, and you would do well to follow his advice.
The part of your post that stuck out to me was “Even if you find a 20-year old home for $1000 (we all wish)…”. Mark, those deals are out there!! When I got started I used to whine to Tony in my emails about what great deals he’s getting in Virginia, but there’s no way it can happen here (Detroit). He just said be patient, hang in there, you’ll find them.
For example, I have bought 4 homes this month, and the most I paid was $2500. The other ones cost $1200 (an '85), $100 (an '80), and $840 (a '76). The $100 home was a tip from a PM (work those PM relationships!!). The home was abandoned and $2000 was owed the park. Greenpoint said I could have it if I could work out paying the park off. So I called PM, offered $800. Her boss called back, asked if I could pay $900. Well, I guess! That amount included January lot rent.
As far as the money, I don’t have an investor at this point for quick cash, so I did a cash advance off a credit card that’s charging 1% interest for 6 months. I generally don’t recommend this, but it’s worth it, as I’ll soon have it sold for $8000, $1000 down and $250 a month. Pay the card back the $1000, and I keep 36 $250 payments.
So it can be done, you just have to get out there and find them. Tony once told me when you find one, you’ll find three. How true!! You just have to hang in there, build those relationships with PM’s and ignore all the signs asking $10K for homes. Buy the books, read them before doing a deal, and ask questions. Lots of people here are happy to help. Good luck to you.
Blane
Re: Two questions - Posted by Paul NM
Posted by Paul NM on January 17, 2001 at 12:36:22:
Hi Mark,
You said “My second question. I am just curious, how can someone start in MH notes with NO money, as the ad for deals on wheels suggests”
I have been buying repo’s and last month put in a bid of $6,400 for two of them. One was a 1995 and the other a 1981. Had the '95 pre-sold for $6,900 cash.
I’ll admit I had a backup investor lined up in case the cash buyer didn’t move fast enough, but he would have cost me half the profits.
I can’t stress enough how buying right leads to peace of mind and frees you to think creatively.
I have now sold the '81 to a recently divorced guy who works for his fathers construction company. In other words, his credit is trashed and he doesn’t really have a real job However, he says he will fix the plumbing, move it to a different park (it’s in a 55+ park that’s upgrading), put $450 down and pay $150/mo for 36 months. I already have the $450 so how high do you suppose my anxiety level is over his performance on the rest of these promises?
I am afraid this experience has kind of soured me on bigger deals. My challenge continues to be doing enough of these to make a living from them.
Paul NM
Re: Two questions - Posted by Tony-VA
Posted by Tony-VA on January 17, 2001 at 06:29:11:
In regards to your depreciation concern. You are still looking at this transaction from a Rental mentality. You won’t be owning the home, accept a short time while you market it. You will sell and hold the financing. As they pay off their loan, you have less and less money in the deal. If they default, say after 10 payments, you may have little or no money left in the deal. You simply turn around and sell it again.
By creating owner financed notes, we create the price for these homes. Depreciation does not come into play (Although David Butler’s material will explain that mobile homes do NOT depreciate as many believe but I will leave this argument to him).
For ex.
You buy a home for $2,500 and sell it for TERMS of 36 payments of $250. You receive only $500 down.
Your buyer only makes 10 payments and splits.
Is this home worth less in 10 months? Are we in a bad position because some may believe it depreciates?
Let the numbers tell the truth. We only spent $2500 to buy the home. We sold for $500 down and have received $2500 in payments. We already have a profit of $500! So we turn around and sell it on TERMS again.
Let’s say this time, because we are concerned about depreciation, we do not negotiate as strongly. We only get $300 down and $200 per month for 36 months.
See how we control the deal by negotiating the TERMS, not the PRICE.
(However, when you negotiate to buy the home, you can argue that the home has depreciated)
We are creating value by creating terms that allow these buyers to purchase a home when they otherwise could not.
You are allowing a very minor, and in my opinion, misplaced concern to hold you back. Overcome it and move forward. (For what it is worth, it is my understanding that because of the type of transactions we do, the IRS treats us with “Dealer Status” and does not allow for us to write off depreciation. I will let JHyre confirm or deny this).
Question 2 in regards to finding the money. Once you have the confidence and understanding of how these deals can be done, money will follow. It may be more expensive at first, until you prove yourself. By this I mean, a friend or family member may be willing to provide you with the $1000 start up for say 1/2 the profits. Expensive? Yes. But 1/2 of something is better than all of nothing.
Future deals you may be able to simply borrow from them at say 15% or 18%. Once you have proven you can make money and protect their capital, would they not prefer to invest their money at 15% or better as opposed to banks paying what 3%-6%? Each month they get payment from you that they can then stick back in their bank account at the lower (SAFER??) yield.
Money is simply an obstacle. We must view gaining access to it as we would overcoming an obstacle. Behind every obstacle lies opportunity. The human brain can find solutions that will solve the problem and capitalize on the opportunity. Money is no different. If one person says no, find out why. Improve your delivery and ask someone else.
Best Wishes,
Tony-VA
If your
Re: GreenPoint - Posted by TeddyB_SC
Posted by TeddyB_SC on January 22, 2001 at 23:08:14:
What number do you use to contact GreenPoint. I have contacted Conseco and Oakwood. Both stated that they would fax me a list of repo’s in my area. Haven’t seen a fax yet. Thanks for your help.
The little voice - Posted by Tony-VA
Posted by Tony-VA on January 18, 2001 at 13:48:26:
Blane, great post and good job on those homes!
Mark if you follow this post, Blane is a outstanding example of perserverance. He has overcome obstacles in this business that had everyone cringing.
I believe that it is natural for us to automatically say to ourselves, “Well Lonnie can buy homes so cheap because he is in a less expensive area.” We then figure we will have to pay at least $5,000 for a mobile home. You know what? You pay exactly what that little voice has settled for.
I negotiated using Lonnie’s techniques and found that people would name numbers under $5,000. I kept at it and the numbers came in under $3,000 and then under $2,000. The last 3 homes I bought this month, I paid $335 each (this includes Jan lot rent of $335…Free homes!) Two were 3 bedrooms and one was and two bedroom. As Blane mentioned, I am a firm believer that when you find one, you find three.
The park manager scored all these deals for me. Lonnie’s negotiating techniques helped a great deal to present the reality of the numbers and ultimately convinced the park and sellers to cut there losses.
I won’t get all my homes for free. I won’t get all my homes for $1,000. But I also won’t pay $5,000 because the little voice now knows that by standing up and shouting “It can’t be done here”, it blocked the view of the negotiater within me. Now it sits back, smiles and says “would you look at that!”
Tony-VA
Re: Two questions - Posted by mark
Posted by mark on January 18, 2001 at 04:20:36:
I don’t follow. How has this experience soured you on bigger deals? Sound like you came out good enough on this experience.
Regarding your challenge to do enough to make a living from this, how many deals like this do you do? Monthly or more or less frequently?
mark
Re: Two questions - Posted by mark
Posted by mark on January 18, 2001 at 03:06:46:
TERMS not PRICE. I get it! So, if I can get a buyer to agree on TERMS PRICE means nothing. No matter how many times I get the MH back and resell it, no matter the MH age, the deal is made on the TERMS not the PRICE. Wow, talk about a paradigm shift! Concern overcome… moving forward. Thank you!
Regarding the IRS/dealer status isssue… if I incorporate my MH note business and buy and sell under the corporate entity I’ll avoid dealer status, wont I?
Question 2 was just a curiosity… I still plan to do the SFH flips with my partner (my business) and use the profits from this to fund my MH note business (my investments), so money should not be an obstacle.
Thanks so much for the example you gave, it helped me to SEE what you were SAYING.
mark
Try Greenpoint.com then Homes for Sale. (nt) - Posted by RobertR
Posted by RobertR on January 23, 2001 at 15:29:26:
nt
Re: Two questions - Posted by Paul NM
Posted by Paul NM on January 18, 2001 at 10:02:17:
It seemed clear when I wrote it
I was really responding to the posts that describe deals where they put in serious amounts of money and then have to collect larger payments to make the cash flows work. As other respondents to your post have described, there are homes out there that can be bought for cash so cheaply you can get most of the cash back from the down payment. Any note is a bonus.
I sleep better knowing my worst case situation is loss of future profit not wondering how to keep making payments if my buyer trashes the place and vanishes.
Paul NM
Re: Two questions - Posted by Tony-VA
Posted by Tony-VA on January 18, 2001 at 07:50:47:
Even by incorporating you cannot avoid the IRS treating you with dealer status.
If you have other passive income investments such as rental properties, you will want to look into seperating them from “Flips”. Flips and Lonnie deals are buying with the intent to sell, not hold. Therefore we get into the dealer status issue.
You don’t want the IRS to confuse your rental properties with your dealer properties. Also, it simply makes more sense to divide these assets so as to protect them from civil liability.
Tony-VA