Re: used mobile home business - Posted by Robb
Posted by Robb on July 31, 2003 at 24:49:36:
Mr C- Steve-
Thanks for the review… I spoke to a friend to day who flips houses and some MH’s and his comments were similar. I’m buying a Job!! Not the normal way of thinking about a job. But one that seems to have pretty good up side and seems to have ability to become more passive as time goes on.
He pointed out every thing must have documentation. Starting with taxes, bank statements, receipts on MH moves, Reputation with PMs, and interviews with subcontract labor. Enough documentation to validate the deal, but not enough to leave his asking price unchanged!!
Warning: The lack of paying taxes on his income over the years has cost him in the purchace price of the business. Normally someone would pay 2-3 times the yearly cash flow for a business like this. If (I know at this point that’s still pretty BIG IF) these numbers hold up, this is a potential loss of 100s of thousands of dollars (or I just might be his goose that laid the golden egg (:-).
My friend also suggested splitting the down payment in half. Half now and half in 60 days to limit the down side. Financing the rest for as long as possible up to 2 years and then offer a lump of about 60-70% discount to the note at the end of the 60 days, only if things are going well.
responses to the responses to your coments:
Brief comments, referancing your numbers follow…
- 20 moves a month at $300 each (is $6,000/month, you’d have to do 20 lonnie-deals to generate that)
-This isn’t truly passive but is pretty close, take a call, schedule a driver and a truck. Goal would be to have payments from notes become the prime income stream
- 8 MH’s paying rent… (someone’s a landlord)
-sorry about the confusion, this is a storage fee that mostly corporations are paying (to protect their interest). Very few people currently walk onto the properity currently. Plan some free (Less shipping and handling!) Homes to drive traffic.
2a) Because of the discount he does nothing to them to sell them and sells them for a minimum of 2X his expenses. He moved 60 MHs last year and has 30 pending filing paperwork and owns 40 outright. (I’d want to see his some proof of this if it was me)
-I’m on the paper trail.
Ok, so he’s no dummie.
Sounds great, but I’d want to see some proof of it.
-He picked up title of an '81 28x44 today and has offered it to me for $2,500 with 2 months free rent. My counter offer is 20% of selling price will report on progress. I am going to interview his best and worst PM lists.
- Why 10 acres? …wouldn’t 1 acre, or 3 or 5 be adaquate? Looks to me like he’s giving away land, and potential profit from other deals.
-because this is a rural area and the planning comission/ water permits will auto-subdivide a 40 acre plot to 4 10’s, with 4 wells, any smaller is a 100k process. Part of the draw of the area is it’s ‘in the country’
Trying to pick up paperwork tomorrow… More to follow