I saw several opportunities for homes around $5k and thought that was a good deal but didn't want to risk $5k without finding out what my local market was like.

The easiest thing I did was go on craigslist and posted a fake ad describing a home very similar to the ones I saw for sale. I went on some random city's CL and stole a picture of a house that would look like a local home. I posted the ad for $10k with owner financing and got flooded with emails. Then I waited a week and posted a similar ad for $13k and got flooded with emails.

I keep talking about craigslist like it's the only tool out there and only tool I've used. It's not. In fact craigslist is just a crutch for me until I can stop using it. I drove a lot of parks and talked to a lot of people about pricing too. I finally figured a decent three bedroom home on financed terms in my area would get a lot of interest and sell quickly for somewhere between $15-20k.

make sure that you require home insurance on those bad boys until you sell the note. Having one of those go up in flames can make it a hassle to keep the payments coming in.

bd,

Do you find people care about age/model? I probably need to just man up and take the 6k I have sitting in a box of packing peanuts and do a deal.

Great Thread!!

I occassionally play poker w/ an older mega rich Israeli-American. He owns TONS of real estate in NYC, has more money than Midas, etc.

He told me that whenever he's looking to buy a business, his primary concern is that it be able to be operated by an "absentee owner".

Out of all the businesses and properties he owns, his favorite is a 100+ unit mobile home park he owns in south Florida. He said he owns the land &/or the concrete slabs the mobile homes sit on, and that is it! No maintenance problems, no tenant problems, no problems at all. Only thing he does is pay a lawn care company for general property maintenance.

Mobile Home Parks are CASH COWS!!

I haven't found many people really concerned with the model. There's a Palm Harbor factory in my area so there may be a slight bias towards them.

As far as year, yes that is a factor. I've been looking at anything from the 1980s. I don't want older homes because the ones I've seen don't show well but primarly because there could be issues with the floor plan. And the homes I've seen in the 90s and up, while I'd certainly buy them if I saw the right deal, are out of my price range. If there's more to say, I'm sure spex could add more wisdom than "Old is bad. New is good."

When buyers call me the first thing they want to know is how much down and how much per month. Then they ask number of bedrooms, what repairs are needed and year of home. Pretty much in that order.

Ya, figuring out whats fair market value is my biggest question, I know in smaller multis and single family its based on surrounding house sales that you can find out from a real estate agent and with big multis its based on the NOI whihc you could find out with rent rolls and such but i didnt know how i would figure out whats fair market value for my area, this idea seems like it worked but can you get into trouble for doing this? Also what did you say in response to the emails you got for your fake MH?

Only if you buy them right. But MHPs are good investments. I've got two, and they're my favorite of my holdings.

Is anyone doing this or has tried doing this in Ontario Canada?????

Can it be done here?

Anyone interested in Mobile Home Parks, buying a mobile home & selling/financing for profit, etc., would do well to spend some time surfing this site:

http://www.mobilehomeparkstore.com/

I couldn't imagine how one would in trouble.

The first round I think I ignored everyone. After that I had a few specific houses in mind so I told people that the one I advertised had sold and I'd contact them if I got one similar.

I don't know the answer to that so ou may want to ask the pros at:

www.mobilehomeuniversity.com and www.creonline.com

I found this article by the guy who runs the mobilehomestore website.

http://ezinearticles.com/?Why-Lonnie...-Me&id=1127481

Seems like money could be made, since you've cleared 30% of your investment just one month into doing a deal. I guess he's just not buying cheap enough.

That's a really bad article. To address his criticisms:

The first major flaw in the strategy of making money buying and selling mobile homes is that you have to sell the home for more than what you have invested in it.

Ummmm. duh? I assume every eighth grader knows this. You should have a pretty good understanding of what you can buy the house for, how much expenses will be and what you can sell the house for. If the difference between total costs of the deal and the MH value is worth enough for you to do get involved tthen you're ok. My goal is to have the home be able to sell for over 2x of my costs. That's a pretty big margin of error.

It's no different than somebody buying a 1960s muscle car and spending thousands getting it back into being a dependable daily driver, but most car collectors aren't in it for the money. That's good, because the $50,000 restored muscle car often sells for just $25,000. That formula won't work for you if you are trying to make money.

Yes, it's quite different. In the Lonnie Deal scenario youre buying it and keeping costs below market value knowing you can sell it at market value. In the vintage car scenario, youre not.


The other major problem with the "Lonnie Deal" concept is that you can't just sell the home one time. In fact, for most of us, you have to sell the home many times before it ever gets paid off.

My understanding is that while one hopes to sell the house the first time, one can make a lot of money reselling the same house over and over. A decent down payment, a decent monthly payment, and screening, should all be occurring. If you don't do one of those, sure you'll have headaches. Still if you do two of these three you will still most likely make money even if the buyer leaves after a few months.


You buy a used mobile home. You pour money into it to make it possible to re-sell. Then you sell it for less than you put in. But that guy only lasts a few months and trashes the home. You get the home back and pour more money into it. Then sell for a loss. And repeat the process ten times.


If this is the plan, don't ever consider buying one.

I wonder why the author wrote that piece. It says that he owns over 50 MHP's but doesn't seem to understand that in order to make a profit you have to sell something for more than you paid for it. I smell a scam.

Great thread! Thanks for all the info, bwana.

I have two questions:

1.) Do you use templates or something for the contracts you put together for the buyer/note holder or is each one unique? Also, any good resources you'd recommend for reading up on this? This is one of my biggest concerns (making sure I cover my ass) before diving into one of these deals.

2.) I'm curious as to how stiff the competition is in my area for folks doing the exact same thing; I'd prefer not to jump into shark infested waters right away. Although I'd assume that the real saavy folks are using these Lonnie deals as ways to raise capital for bigger deals that they eventually move onto, do you have any ideas/thoughts on good litmus tests for seeing how much competition is in the area?

Bwana,
Thanks for the thread, this is very interesting. It seems like your business model requires you to buy a MH and then resell it for 2-3 times your purchase price. Why does that work? How do you add that much value? Is it just renovating plus providing financing?

1. There are sample contracts in the back of Deals on Wheels which are decent and I have modified them a bit. I knew from the beginning that the contracts needed to be worked on but I figured if I got EVERY one of my questions answered, I'd never do anything. There's still always something to learn or adjust so I read until I learned enough and now fine tune as I go. Getting better contracts is on my to do list.

2. There’s virtually no competition. I’ve met the one guy who does RE as his living and he tells me his other RE buddies think he’s crazy for getting into mobile homes.

those two things plus buying from a motivated seller which is where the most value is gained.

hmmmm this sounds like it would be a very important concept when considering to purchase anything as an investment, but is made much easier because there's less competition.

/end investment newbiness.

Most people are uncomfortable with the idea of dealing with MHs because they think they are "above" it, or it has no prestige, or they wouldn't want to have anything to do with "trailer trash."

So for purely emotional and not financial reasons, there is practically no competition.

sounds a lot like poker eh? although there is a lot of competition now, i really believe it hasn't reached equilibrium yet.

also, i think redmanplus or someone similar said that it's best to invest in something obscure so you're much less likely to face competition, and i think this certainly qualifies as obscure in many people's eyes for reasons you mentioned.

Isn't there a similar issue with all very cheap homes?

Trailers have a much worse stigma than even a cheap house.

I've looked at the rent multiples and it appears that this is quite the case. Seems like a good enough reason for me.

This is very encouraging. What is exciting is that the entry barrier (capital-wise) is pretty low and the potential for a 'snowball' effect is enormous as was already mentioned earlier.

I just bought Lonnie's book and the one question I have so far is why would the mobile home park owner not be doing this?? That seems like a good short to mid-term goal when starting out at doing these MH deals. Raise up enough capital to buy a full park and then finance every home in the park. This way, the tenants know there will always be someone at least willing to negotiate to buy their home when they need to move and the owner of the park can continually re-profit every time a home is turned over.