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How I started in mobile home notes

triple J

New Contributor
Aug 8, 2007
48
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Utica, NY
Don't know if this is the right place for this topic or not... But I wanted to share my experience with mobile home notes. This is a great way for newbies or those who have little cash to get started. It can give self confidence and generate some great returns.

I heard a lot about a book called Deals on Wheels by Lonnie Scruggs and decided to buy it and give it a try. Its a WONDERFUL "how to" book. I read it in 1 day and I decided to do a "Lonnie Deal". I decided to buy a used mobile home and resell it offering owner financing. Pretty simple? Sure was!

Deal 1: Knew very little about mobile homes but decided it was time to learn. I bought my first mh for $5k. Sold it 1 week later for $7500 with $750 down and financed at 12%. Not great $$ but not too bad. A year and a half later, the owner wanted out, I had recouped my initial investment, and I took it back. I sold it yesterday for $4500 cash. I was offering finance at $5900 but got the cash offer and took it.

Deal 2: Bought my 2nd mh in a park for $2500. Sold it 3 days later with O.F. for $8300. $1000 down financed $7,300 at 14% for 36 months. Made all my out of pocket money back in 3 or 4 months. They're still paying $242 and some change each month on my $1,500 investment. What's my ROI? As Lonnie woud say "Good 'nuff!"

I've done a total of 5 "Lonnie deals" over the past year and a half. They have had excellent returns for the amount of $$ invested on my part and have been virtually hassle free. I look forward to the mail man not "passing me by" on my Lonnie deals (a Lonnie expression that your mail box should never be empty when the mail man delivers the mail and there should always be a check from a deal). Although not big fastlane, it's a way for people to get started, get confidence and earn some great returns!
 

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andviv

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Great example. Very inspiring. Fastlane mentality, IMO. You don't have to hit home runs every time at bat... many singles and doubles will do as well. Rep++

Would you mind adding a book review for that one in the Book Review Real Estate section?

Thanks for sharing.
 

Yankees338

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Jul 24, 2007
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Great post. Thanks for sharing. Looks like I'll be diving into some research about mobile home notes...
 

Jason_MI

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Jul 25, 2007
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Hmmmm.....this sounds interesting. I used to deal with a lot of the mobile home crowd in the SS business. We have several large parks here, but here's definitely a difference in their flavor...eg.., there are mobile homes, and then there are UGLY mobile homes. What kind do you deal in? Are you all over the place or do you focus on one park? What do you think of these deals in a down-area? Am I asking too many qeustions? Have I had too much coffee?
 

Starsky

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Aug 29, 2007
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Ive read Lonnies book & it provides good insight the mobile home market.. my only complaints about it is you only own the home & not the land under it. You are under the control of the Mobile home Park Manager.. If they decide to raise lot rent or decide that they want the home towed out, it will cut into your profits.. If you can control the land thats much better. Also MH notes have a higher default rate so thats more chance you will have go on "chases" to get your money, and also evictions costs that factor in. Its not a passive biz because to make more money, you have create more notes & make more sales etc when the notes pay off. Id also recommend looking more into land/home deals if you continue with Mobiles..
 
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triple J

New Contributor
Aug 8, 2007
48
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Utica, NY
Jason,

A standard "Lonnie" deal that I follow is to buy older single wide mh's typically 20-30 years old for $2k-$4k in decent parks. You will need to buy so you can at least double your asking price and offer financing (I didn't follow this on my first deal but at least doubled my sell price on deals 2-5). The interest rates I've charged have been from 12%-19.75% and no one has ever made a peep about the rate. Just know the laws about rates in your state. At 19.75%, selling a home that I've doubled my price, and getting at least 10% down, you can see how quickly returns can jump sky high!

All my deals are in 5 seperate parks but all within a 20 minute drive from my house. 4 of the parks are within a couple of miles of each other. My biggest challenge in all of this is the park owners. Some could not grasp the concept of owner financing. They considered it renting which is not allowed in most parks. Others I think had control issues with someone outside coming into their park and making a few bucks. I have good rapport with the 5 park owners so I can provide references if I deal with a new owner which is very helpful. I haven't done a deal in over a year b/c I've been too tied up in other projects.

I live in upstate NY- which is a down area- and I have no problems selling. As far as I know, I am the only one doing this in my area. FYI double wides do not work with this model as they are usually much more expensive and you can't double your price.

Lonnie did an excellent job of 1. Finding the customer's need (no one finances 20 year old mobile homes- usually 10 years is the cut off) 2. Filling his own need (CF with great returns). Even if you're not interested in the mobile home business, I really recommend Lonnie's book (He's got 2 and they're both good. You can buy the package on ebay and it's soooo easy to read). He really thinks outside of the box. For example, if he has extra money that he wants a return on, he might call one of his people that he financed that always pay on time and offer to finance a couch or TV and attach the debt to the mobile home. Or he will refi his good paying people after they've paid him off. As long as the mail man doesn't pass him by.:smxB:
 
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triple J

New Contributor
Aug 8, 2007
48
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Utica, NY
my only complaints about it is you only own the home & not the land under it. You are under the control of the Mobile home Park Manager.. If they decide to raise lot rent or decide that they want the home towed out, it will cut into your profits.. If you can control the land thats much better.
True you don't own the land, but on the up side. It's very easy to get into it b/c it's already set up (plumbing, electric, mobile home) and you don't have to buy the land. Park owners can raise the rent but that falls on the renter not me. The most rental increase I've experienced is $25/month. Everything varies state to state, but as far as I know park owners can't just force a trailer out while someone is living in it. If it goes up for sale, that's a different story. These are things that need to get hammered out before getting started.

Also MH notes have a higher default rate so thats more chance you will have go on "chases" to get your money, and also evictions costs that factor in.
You have to know your tolerance for risk. I own rental properties that I rent to low to moderate income folks (not welfare) so dealing with "trailer people" was not a scary thing for me. Keep in mind that the mobile home people are buying not renting and buyers tend to be better. The key is screen your people. Make sure they have a job and have been there for at least a year. I don't like the payment to exceed 1 week's pay.

Its not a passive biz because to make more money, you have create more notes & make more sales etc when the notes pay off
No, it's not truly passive but why couldn't it be? In the past 1.5 years, I spend on average probably 2-3 hours a month on my 5 mobile homes. Obviously, if I had 30 I would be spending more time. Sometimes you get the trailer back which is nice b/c then you resell again and you don't have to go find another deal.

I just wanted to share my story and think it's a great way to get started in creating a stream of income and also give folks confidence and get the creative juices flowing :hurray:
 

bflbob

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Don't know if this is the right place for this topic or not... But I wanted to share my experience with mobile home notes. This is a great way for newbies or those who have little cash to get started. It can give self confidence and generate some great returns.

I heard a lot about a book called Deals on Wheels by Lonnie Scruggs and decided to buy it and give it a try. Its a WONDERFUL "how to" book. I read it in 1 day and I decided to do a "Lonnie Deal". I decided to buy a used mobile home and resell it offering owner financing. Pretty simple? Sure was!
My son gave a presentation on Lonnie Deals at last year's gathering in Phoenix.
There was a ton of interest in it!

I love the concept, because it is fairly inexpensive to get into.

He may be coming to your neck of the woods soon...
...he's in the final running for the NYS Park Police and the Academy is in Utica.
 
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triple J

New Contributor
Aug 8, 2007
48
11
21
Utica, NY
He may be coming to your neck of the woods soon...
...he's in the final running for the NYS Park Police and the Academy is in Utica.
Would love to hook up with him. Please let me know if he's coming and my hubby and I will take him out for some Utica riggies, Utica greens, and some Utica Club beer!!! Or maybe he prefers Buffalo wings? :banana:
 

Starsky

New Contributor
Aug 29, 2007
106
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Trip J,
In my due diligence, I concluded I wanted to control the land/home moreso that control home and rent the land.. More deductions, appreciation/depreciation & exits.. But having a cpl wouldnt hurt ones portfolio though.
Best wishes & thanks for posting
 

S928

Contributor
Aug 7, 2007
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Great post Triple J +.

Yep, MHs seem like a good place to start for those who have limited capital. Honestly, I never considered MHs until I read your post. Now, I'm on a mission to purchase Loonie's book. Thanks! I think the process you described is a brilliant one.

Do you normally keep the MH in the park where it's located? If so, do you talk to the park manager before you negotiate with the seller? How do you safeguard your investment, insurance? If someone defaults, how do you take back the home, is it like an eviction? So many questions! Thanks in advance.
 

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ProInvestor

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Aug 15, 2007
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Found this at one of Mr MHs lurks...
---
It is great to here someone else is working th MH market. As Steve said it is a great opportunity to make some outstanding returns. I have a bunch of them and here is what I do. I buy one for say $1,500 and pay cash. I ask them how much they have to put down as some times they will suprise you and say $2,000. I usually get $500 - $1,000. I charge 14.75% interest and also ask them what they can afford for a payment. I usually get $150 - $250/mo on top of the lot rent etc. I generaly bump the price 3 times what I paid for it and some times much more if I got a great deal. I use a prommissory note to sell mine and would never rent them although you can make $ with a good repair guy.

I want to make sure you understand that you really need to get to know the park owner or manager who is approving the tenant for the park. They can turn your great deal into a lemon if none of your buyers qualify for the park. That means you have to move the home to anouther park. I solved this problem by buying the parks. I put in as many as I can in my parks to really supercharge the cashflow.

I could go on & on because I love this game. Feel free to contact me if you have questions.

Keep Charging!

Jerry Hoganson
---
 

nomadjanet

Contributor
Aug 28, 2007
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Thanks for all the info. We have done 2 mobiles before but never left them in the park this is a great concept as you say setting them up new with utilities can run into some investment. Also thanks for the book recommendation, it is on my list.
Janet
 

bflbob

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Nate

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This sounds like it's right up my alley. I've wanted to get into real estate, but I just don't have the money.

Would these books be helpful for someone like me though? I have NO experience. I wouldn't know how to do a "promissery note" or anything else. I mean I am starting FRESH.
 

nomadjanet

Contributor
Aug 28, 2007
310
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TX
This sounds like it's right up my alley. I've wanted to get into real estate, but I just don't have the money.

Would these books be helpful for someone like me though? I have NO experience. I wouldn't know how to do a "promissery note" or anything else. I mean I am starting FRESH.
Promissory Installment Note
RECITATIONS:
Date:

Borrower:

Borrower’s Address:



Payee:

Place for Payment:



Principal Amount:

Term:

Monthly Payments:

________________________________

________________________________

________________________________

________________________________

________________________________

________________________________

________________________________

$_______________________________

________________________ (months)

$_______________________________


INTEREST RATE: Annual interest rate on matured, unpaid amounts shall be the maximum amount permitted by the Laws of the State of Texas.
PAYMENT TERMS. This Note is due and payable as follows, to-wit: _____________________ (_____) [insert number of payments] equal monthly payments of $__________________ principal [insert monthly payment amount]. The first such payment due and payable on the 1st day of _____________________ , 20____, and a like installment shall be due and payable on the same day of each succeeding month thereafter until the total principal of $__________________ principal [insert total principal amount] is paid in full. If each payment is not paid on time, the remaining balance will be subject to the maximum amount of interest permitted by the Laws of the State of Texas.
BORROWER’S PRE-PAYMENT RIGHT. Borrower reserves the right to prepay this Note in whole or in part, prior to maturity, without penalty.
PLACE FOR PAYMENT. Borrower promises to pay to the order of Payee at the place for payment and according to the terms for payment the principal amount plus interest at the rates stated above. All unpaid amounts shall be due by the final scheduled payment date.
DEFAULT AND ACCELERATION CLAUSE. If Borrower defaults in the payment of this Note or in the performance of any obligation, and the default continues after Payee gives Borrower notice of the default and the time within which it must be cured, as may be required by law or written agreement, then Payee may declare the unpaid principal balance and earned interest on this Note immediately due. Borrower and each surety, endorser, and guarantor waive all demands for payment, presentation for payment, notices of intentions to accelerate maturity, notices of acceleration of maturity, protests, and notices of protest, to the extent permitted by law.
INTEREST ON PAST DUE INSTALLMENTS AND CHARGES. All past due installments of principal and/or interest and/or all other past-due incurred charges shall bear interest after maturity at the maximum amount of interest permitted by the Laws of the State of Texas until paid. Failure by Borrower to remit any payment by the 15th day following the date that such payment is due entitles the Payee hereof to declare the entire principal and accrued interest immediately due and payable. Payee’s forbearance in enforcing a right or remedy as set forth herein shall not be deemed a waiver of said right or remedy for a subsequent cause, breach or default of the Borrower’s obligations herein.
INTEREST. Interest on this debt evidenced by this Note shall not exceed the maximum amount of non-usurious interest that may be contracted for, taken, reserved, charged, or received under law; any interest in excess of the maximum shall be credited on the principal of the debt or, if that has been paid, refunded. On any acceleration or required or permitted prepayment, any such excess shall be canceled automatically as of the acceleration or prepayment or, if already paid, credited on the principal of the debt or, if the principal of the debt has been paid, refunded. This provision overrides other provisions in this instrument (and any other instruments) concerning this debt.
FORM OF PAYMENT. Any check, draft, Money Order, or other instrument given in payment of all or any portion hereof may be accepted by the holder and handled in collection in the customary manner, but the same shall not constitute payment hereunder or diminish any rights of the holder hereof except to the extent that actual cash proceeds of such instruments are unconditionally received by the payee and applied to this indebtedness in the manner elsewhere herein provided.
ATTORNEY’S FEES. If this Note is given to an attorney for collection or enforcement, or if suit is brought for collection or enforcement, or if it is collected or enforced through probate, bankruptcy, or other judicial proceeding, then Borrower shall pay Payee all costs of collection and enforcement, including reasonable attorney’s fees and court costs in addition to other amounts due.
SEVERABILITY. If any provision of this Note or the application thereof shall, for any reason and to any extent, be invalid or unenforceable, neither the remainder of this Note nor the application of the provision to other persons, entities or circumstances shall be affected thereby, but instead shall be enforced to the maximum extent permitted by law.
BINDING EFFECT. The covenants, obligations and conditions herein contained shall be binding on and inure to the benefit of the heirs, legal representatives, and assigns of the parties hereto.
DESCRIPTIVE HEADINGS. The descriptive headings used herein are for convenience of reference only and they are not intended to have any effect whatsoever in determining the rights or obligations under this Note.
CONSTRUCTION. The pronouns used herein shall include, where appropriate, either gender or both, singular and plural.
GOVERNING LAW. This Note shall be governed, construed and interpreted by, through and under the Laws of the State of Texas.
Borrower is responsible for all obligations represented by this Note.

EXECUTED this __________ day of _______________________, 20_____.

[Borrower’s Signature:]

__________________________
[Borrower’s Printed or Typed Name]:
__________________________

You can google free promisary note and download one for any state that; copy & paste to word & format to fit the way you want.
Janet
 

Nate

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Sep 24, 2007
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Whoa, thanks for that. I feel like I should copy and paste or something :)

So what makes it legal after it's all filled out and signed? I could probably still botch this up somehow. Notary?
 
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triple J

New Contributor
Aug 8, 2007
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Utica, NY
Do you normally keep the MH in the park where it's located? If so, do you talk to the park manager before you negotiate with the seller? How do you safeguard your investment, insurance? If someone defaults, how do you take back the home, is it like an eviction? So many questions! Thanks in advance.
So far I keep them in the park. Moving them can get quite expensive and I've never done it. Also, they need to have the wheels and axel. Before I buy, I talk to the p.o.(park owner) and make sure they are OK with what I'm doing and that the home is OK to stay. This is VERY crucial! I also get a feel for what type of person they are. Are they cool and laid back or are they going to be a pain in the @ss? I had one p.o. that was such a pain we decided to walk away from her park. We were not going to get into a situation where we buy a place and her not approve anyone. All buyers we finance are required to carry insurance and name us as mortgagee. I've only taken one mh back, and they just said they were moving out so it was no big deal. I haven't actually thrown anyone out, but if I did, I would send certified mail that I have reposessed the mh and that they now are tenants and all legal procedures will be handled under NY state landlord/tenant law (my attorney found something that I put in a letter). It is extremely easy for me to get rid of a tenant in NY. I can also take them to small claims, but they do not colateralize anything in NY small claims. They just give out judgements. This is where it is important to know your state laws.
 

AroundTheWorld

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You can google free promisary note and download one for any state that; copy & paste to word & format to fit the way you want.
Janet
FYI. In my state, if you want the note to be a lien on RE and filed at the court house, both signatures need to be on the document.

IMHO - Get an attorney. Sure, you can find the stock forms online, but you may miss things - and if you find a good attorney the future dividends will more then pay for your attorney fee.

Relationships, relationships, relationships.
 

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triple J

New Contributor
Aug 8, 2007
48
11
21
Utica, NY
Id recommend Tony Collela's book on Land/Home(mobiles on their own land package) deals.. for those like myself who didnt want to give up a level of control to a park manager...
Yes, Tony is very respected and is known as the expert on land deals. I've read his material and it's very good, but pricey imo.

This is where i got most my info from concerning mobile home investing..
http://creonline.com/mobile-homes/index.html
Ditto! Tony and Lonnie both contribute to the forums there and answer questions. Haven't visited in a while though.
 
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triple J

New Contributor
Aug 8, 2007
48
11
21
Utica, NY
Would these books be helpful for someone like me though? I have NO experience. I wouldn't know how to do a "promissery note" or anything else. I mean I am starting FRESH.
Absolutely! This is a "how to" book. But it's up to you to go out and do it. You do have to do your dd on what's allowed in your state though. Let me put it this way, I read the book in a day and did my first deal less than a week later. Lonnie puts all his forms that he uses (he's in VA) at the back of his book. Use them as a guide. Have an attorney review them and tweak them. I had mine review them and he said they were fine plus or minus a couple of sentences so we made the changes.
 

bflbob

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I haven't actually thrown anyone out, but if I did, I would send certified mail that I have reposessed the mh and they now are tenants and procedures will be handled under NY state landlord and tenant laws (my attorney found something that I put in a letter). It is extremely easy for me to get rid of a tenant in NY. I can also take them to small claims, but they do not colateralize anything in NY small claims. They just give out judgements. This is where it is important to know your state laws.
When we talked to our RE attorney on this, he suggested that we do a lease/option on them in NY. Something like $750 down, plus $350/month for 36 months with a $1 buyout at the end. He said it is easier to evict than to foreclose. In effect, it is the same as the sale, but easier to kick someone out with if need be.
 
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triple J

New Contributor
Aug 8, 2007
48
11
21
Utica, NY
When we talked to our RE attorney on this, he suggested that we do a lease/option on them in NY. Something like $750 down, plus $350/month for 36 months with a $1 buyout at the end. He said it is easier to evict than to foreclose. In effect, it is the same as the sale, but easier to kick someone out with if need be.
Great point. It gets a bit tricky because we are offering a "mortgage" on personal property not real property (RE) and the last thing you want to do is foreclose on a mobile home if you can do a simple eviction. But you shouldn't have to foreclose b/c it is not real estate. I'll have to ask my attorney about the l/o thing. Thanks Bob :)
 

nomadjanet

Contributor
Aug 28, 2007
310
54
26
TX
FYI. In my state, if you want the note to be a lien on RE and filed at the court house, both signatures need to be on the document.

IMHO - Get an attorney. Sure, you can find the stock forms online, but you may miss things - and if you find a good attorney the future dividends will more then pay for your attorney fee.

Relationships, relationships, relationships.
Yea, I know each state is different, I just happen to have the Texas one. But the newbie guy said he did not have one so giving him a place to start.
 

AroundTheWorld

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Yea, I know each state is different, I just happen to have the Texas one. But the newbie guy said he did not have one so giving him a place to start.
nomadjanet,

the beauty of the internet..... miscommunications. I wasn't directing the FYI at you.... just to the community at large - and I thank you for sharing the form you had!
 

nomadjanet

Contributor
Aug 28, 2007
310
54
26
TX
Yes, I appreciate the form as well.

- From the Newbie guy

Sorry Nate, if I offended you I sometimes type before I think:blush:, I will have to put a lid on my opinionated self. :smxB:
I am not the expert on this process either; I have never sold mobiles not attached to land so the idea of the sale with a promissory note is new to me also. I just remember being younger and not taking opportunities because I was mystified by "legal documents". I am talking pre internet days, now there is so much information available to us perhaps I am now going to far the other way. I have sold trucks with a promissory note and with me listed as the lien holder & it seems like it would be a similar process. I am going to read up on the issues and see what I have been missing.
Janet
 

Nate

New Contributor
Read Millionaire Fastlane
Sep 24, 2007
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Utah
No, no. I wasn't offended at all. I was just piping in again with no real relavent information at all. And I am very mystified by these real estate related legal documents, so I really appreciate that you would find one and post here so I could see. Thank you very much.
 

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