Posted by SCook85 on June 20, 1999 at 08:30:39:
Dirk,
It’s tough to dispute those numbers. I’ll be doing MH’s soon in Virginia and North Carolina. I know now to stay away from Double wide’s.
SCook85
Why Single wide Mobile Homes beat Double wide Mobile homes - Posted by Dirk Roach
Posted by Dirk Roach on June 20, 1999 at 01:36:04:
Hi everyone
In checking my email tonight I have had several people ask me about Double Wides vs. Single Wide Mobile Homes. For the Lonnie Method of Mobile Home Investing.
Here is why I don’t like Double wide Mobile Homes in the typical “Lonnie Deal” scenario.
It’s a matter of exposure. In my market the average used Double wide I can usually pick up for between 7 and 10 thousand dollars. In my market that same Double wide would sell for around 25 to 30 thousand dollars.
Wow! What a deal, right?
No not really for me.
In order to do this deal remember I have to tie up 10 thousand dollars for ONE deal.
Here are what the numbers look like: of sale price of 30k.
27k loan, 3k down (10% of 30k)
$300.00 per month
@ 12.75% Int.
296.08 month term (24.673 years)
Personally I feel that I would be in this deal too long for me.
It would be a hard note to sell. Remember it’s a note game and you might want/need to sell your note at some time.
It just doesn’t make sense for me, in my investment strategy to do this, not when I have created one note from this deal. Lets take the same 10k and break it up into 2k buys. 5 Lonnies deals (older single wides) which could easily sell for 10k a piece (in my market):
9k Loan; 1k down (10% of 10k total sales price)
$250.00 monthly payment
@12.75% Int.
45.61 month length. (3.80 years)
multiply that by 5, remember we are doing this five times.
Now lets suppose that the folks don’t pay, in our double wide it stinks because then we have to carry space rent while we get the home ready again to sell, and while we market the home and get a new buyer into the home. All this time we have no income coming into us. We do however have cash going out for the space rent.
On our 5 Lonnies, we still have four other deals pulling us through this storm. So the hit is not as hard. Our exposure is less.
Also let’s say that we want to pull out some cash for whatever reason. To fund some more deals (for example) we need another 10k quick. And we don’t want to take on any investors. Well even at .50 on the dollar we could sell 1 of our income streams (monthly cashflows) for $4500.00 we add that back to the 5 thousand we already have from the downpayments, and we now have $9500.00, We add another $500.00 a single months payments from 2 of our remaining 4 monthly cashflow streams and have another 10k to do it all over again.
Wow! Now in my opinion THIS is a good deal.
Remember it’s all a note game.
So now you can see why we all say, get Lonnie’s materials. His concepts on used mobile home investing are hard to beat.
Good Luck to you and yours,
Dirk
Re: Why Single wide Mobile Homes beat Double wide Mobile homes - Posted by Brad
Posted by Brad on June 20, 1999 at 12:15:18:
Wow, thatnks Dirk. That really makes the theory of (dealing in bigger numbers = bigger profit) look pretty silly. Excellent points on a cashflow perspective. Also, 1 question for you. If you created a note for say, I dunno (I have never done a MH deal) 35K on a double wide beacuse they sell for 30, and you are creating owner financing, and you invested 10k to get the deal going, how long would it take you to sell you rnote for 35k? If you could turn that into cash really quickly by selling the note, coming out felling it for .5 on the dollar, wouldn;t you then net around 10k or so, assuming the place was in good shape and you had to do minimum repairs? I mean that ispretty good for investing 10k and coming up with a 100% profit in a short time, right? Or am I looking at this all wrong?
Very new to the whole trailer thing. Would have never looked into before had I not come to this website. Thanks for all of the great tips and info that everyone gives. Thanks in advance,
Brad