Mobile Home Investing

[TheHound]

Have seen recommendations for Lonnie Scruggs' book Deals on Wheels as a viable way for someone without a lot of cash to get into real estate investing. All the threads on this forum about mobile home investing seem to be old, so I'm not sure if anything has changed and if this is still a feasible idea.

So my question is.....is anyone currently doing this? Particularly any Canadians, especially in Ontario? Thanks!

 

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[Mr4213]

I worked with someone in the past who did mobile home investing. Used the tenant down payment to get his investment back. Then collected $500/monthly I believe.

Also had issues with it as well though. Look at who it's typically rented to. He also had to deal with shitty contractors.

 

[TheHound]

I worked with someone in the past who did mobile home investing. Used the tenant down payment to get his investment back. Then collected $500/monthly I believe.

Also had issues with it as well though. Look at who it's typically rented to. He also had to deal with shitty contractors.

yes I figured the clients might be more troublesome. however, I am unsure on other methods for a young person without a lot of cash to get started in real estate investing

 

[Runum]

I did some for years and made a little money.

Many of the strategies that Lonnie wrote about are well known today so you have to be crafty and resourceful. Some strategies may not be legal in your state anymore. You will have to check and see.

You buy for cash at a very low cost and, hopefully, recoup your cash from a sales deposit. Then the buyers/renters make monthly payments and that is your profit.

Challenges:

You are having to deal with the buyers/renters and park management. Park management may or may not be stable and they may or may not like you being in the middle. I dealt with one park that had a great manager. That manager moved on and the new manager was not the same caliber, she pissed the residents off. Then, both the manager and the buyer/renter start calling me because they can't get along.

The other issue is the buyers/renters are usually not the best quality of people themselves. They will bring in unallowed pets. They love pit bulls, mastiffs, etc.

I call them buyers/renters because they will not take care of the MH and you will usually get it back. In order to resell it you will have to clean up the mess and repair damage.

Sometimes when they forfeit the MH, they will also neglect to pay other bills attached to the MH, water, propane, gas, lot rent, ele, taxes. These could wind up being liens against the MH that you will be responsible for.

Also, make sure you know the title process and follow it to the letter. Subscribe to your state's email address that manages the MH titles and licensing. They will update you on any new state rules.

You may have to take a state licensing course to do this depending on your state's laws.

There is money to be made in MH. It is tough, cut throat, and the person with the best, current knowledge wins. Others lose.

Good luck.

 

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[TheHound]

I did some for years and made a little money.

Many of the strategies that Lonnie wrote about are well known today so you have to be crafty and resourceful. Some strategies may not be legal in your state anymore. You will have to check and see.

You buy for cash at a very low cost and, hopefully, recoup your cash from a sales deposit. Then the buyers/renters make monthly payments and that is your profit.

Challenges:

You are having to deal with the buyers/renters and park management. Park management may or may not be stable and they may or may not like you being in the middle. I dealt with one park that had a great manager. That manager moved on and the new manager was not the same caliber, she pissed the residents off. Then, both the manager and the buyer/renter start calling me because they can't get along.

The other issue is the buyers/renters are usually not the best quality of people themselves. They will bring in unallowed pets. They love pit bulls, mastiffs, etc.

I call them buyers/renters because they will not take care of the MH and you will usually get it back. In order to resell it you will have to clean up the mess and repair damage.

Sometimes when they forfeit the MH, they will also neglect to pay other bills attached to the MH, water, propane, gas, ele. These could wind up being liens against the MH that you will be responsible for.

Also, make sure you know the title process and follow it to the letter. Subscribe to your state's email address that manages the MH titles and licencing. They will update you on any new state rules.

You may have to take a state licensing course to do this depending on your state's laws.

There is money to be made in MH. It is tough, cut throat, and the person with the best, current knowledge wins. Others lose.

Good luck.

thanks! I haven't read Deals on Wheels yet as I'm in Ontario, Canada and was wondering if this book can still be applicable to us Canadians

 

[Ecom man]

Have seen recommendations for Lonnie Scruggs' book Deals on Wheels as a viable way for someone without a lot of cash to get into real estate investing. All the threads on this forum about mobile home investing seem to be old, so I'm not sure if anything has changed and if this is still a feasible idea.

So my question is.....is anyone currently doing this? Particularly any Canadians, especially in Ontario? Thanks!

I checked into doing it in my area and none of the mobile home parks allow renting out the trailors without jumping through a TON of hoops. Be sure to make sure that it is allowed in the park before you buy the mobile home.

 

[Mr4213]

yes I figured the clients might be more troublesome. however, I am unsure on other methods for a young person without a lot of cash to get started in real estate investing

Wholesale is a good option. Just depends on your ability to execute.

I used to dabble in real estate. I prefer to avoid it. Lots of bullshit that goes into it and you have to constantly copy it. IMO it is too hard to seperate your time from it. There are other ways out there for a young guy with no cash to make money.

 

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[Ravens_Shadow]

If you're owner financing like most mobile home investing books would tell you, including scruggs's book:

You can only do three (3) owner financed properties per year as it stands now due to federal regulation in the united states.

This only applies to single family residences such as normal homes and mobile homes but does not apply to commercial properties, land, or multi-family unites (duplex +).

Once you do your three, you have hit your limit, and at that point have to get the loans originated.
One way to get around the law legally:

Become a certified mortgage loan originator and follow the whole mortgage loan process. Stupidly hard process not worth your time.

One way to get around the law legally (in theory).

Find a mortgage loan originiator. Tell this originator that you'll pay them a flat fee of $100 per loan that they originate for you so that you can get the legal stamp on each paper. Strike up the deal with the mortgage company and owner finance all of the homes you want. They originate loans all day, and you'll be giving them $100 for 2 minutes worth of work.

DO: Make sure you have an LLC managing all of this.
DO: Consult a realestate lawyer before you follow my advice on option 2.

 

[csalvato]

Wholesale is a good option. Just depends on your ability to execute.

I used to dabble in real estate. I prefer to avoid it. Lots of bullshit that goes into it and you have to constantly copy it. IMO it is too hard to seperate your time from it. There are other ways out there for a young guy with no cash to make money.

how old were you when you were dabbling in real estate investing?

 

[Mr4213]

how old were you when you were dabbling in real estate investing?

Earlier this year. I still attend local REIA meetings just to learn more and network.

 

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[CashFlowDepot]

Earlier this year. I still attend local REIA meetings just to learn more and network.

I just got 20+ mobile home leads all between $500 to $5,000. If anyone is interested in doing some "Lonnie Deals" these would be ideal.

So, what is a Lonnie Deal ( named after Lonnie Scruggs) - you buy an older mobile home for $2,000 to $5,000. Do NO repairs. Then advertise it for sale with seller financing fpr 2 to 3 times more than you bought it for. You will usually sell within a week, get $2,000 to $5,000 down, then get monthly cash flow of $250 to $500 a month. You usually get all the cash you used to buy the mobile home back with the down payment of your buyer but sometimes it takes 6 months to get all your cash out.

The reason this works so well is because it is very hard to get bank financing for a property under $50,000. So the seller financing is super appealing to first time home buyers.

In Florida especially you do run in to the (nice) problem, that you buy the mobile home for $3,000 then advertise it for sale with seller financing for $9,500 and the buyer wants to pay CASH. Lots of snow birds in Florida.

Lonnie Deals are an affordable way to get started in real estate investing.

 

[TheNextTrump]

So, what is a Lonnie Deal ( named after Lonnie Scruggs) - you buy an older mobile home for $2,000 to $5,000. Do NO repairs. Then advertise it for sale with seller financing fpr 2 to 3 times more than you bought it for.

Seems pretty crooked lol.

It sounds like ol' Lonnie was scam artist.

 

[csalvato]

Seems pretty crooked lol.

It sounds like ol' Lonnie was scam artist.

Why? It's arbitrage.

 

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[TaxMan79]

I my brother-in-law knew someone who rented out mobile homes. Not the Lonnie Deals you are talking about(I have read the book) but still in the same area. He said the renters would usually trash the place. It got to the point where he had to reinforce everything and almost make it look "institutionalized" with heavy foot traffic carpet, bolt down the refrigerator and ac unit(prime targets for scrap metal), and use a special type of indoor paint.

I think flipping them like Lonnie describes would be the way to go. Although, I imagine there must be something terribly wrong with the mobile home if it is that cheap and I would be careful reselling it.

 

[EvanOkanagan]

Wholesale is a good option. Just depends on your ability to execute.

I used to dabble in real estate. I prefer to avoid it. Lots of bullshit that goes into it and you have to constantly copy it. IMO it is too hard to seperate your time from it. There are other ways out there for a young guy with no cash to make money.

In what way did you dabble in Real Estate?

I'm always curious what someone means when they say they used to "dabble" in something.

 

[Mac]

There's always a debate about ethics when it comes to financing, but the reality is the person(client/customer) wouldn't be able to afford the property/home/vehicle/thing unless they had financing. So why would you give somebody financing (taking a major risk) without a proper reward in return?

Also in Ontario I'm not sure if you'll get taxed on capital gains. Do mobile homes count as places of residence? In Ontario if you sell a property that's not your primary residence you get hit with capital gains.

In Ontario the tenant laws are very bad too. There's no security for the property owner. My dad used to have a rental property where people would just sponge off the property for 3 months without paying then repeat after they got evicted so they can live rent free.

And if you throw all their stuff out you end up getting charged, not the people they don't pay.

 

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[CashFlowDepot]

Seems pretty crooked lol.

It sounds like ol' Lonnie was scam artist.

Lonnie was no scam artists. He created a great system to help sellers, buyers and investors.

If the mobile home is worth $15,000 but the seller cannot sell it because most buyers don't have $15,000 cash and there is absolutely NO financing to buy a used mobile homes. They it helps the seller a lot when an investor can buy for $5,000 cash. It is more cash than the seller could get from most mobile home buyers.

It also helps mobile home buyers because you are offering seller financing. Remember there is no bank or mortgage company financing for older mobile homes. So they can buy for maybe $2,500 or $3,000 down then monthly payments. It is their only chance to be a home owner.

win win win for seller, buyer and investor. That's the beauty of the strategy.

 

[CashFlowDepot]

Right now, I have 20+ mobile home seller leads. They have been trying to sell their mobile home for more than a year for $15,000 to $20,000. But could not find a buyer who had that much cash. And, like I said, even if they find a buyer with a little cash, there is no bank financing for the balance. The seller's have lower their price again and again in hopes of finding a buyer. Now they are asking $1,000 to $5,000 for their mobile homes even though the home is worth $15,000. That's what you call a motivated seller. And it is where the opportunities are for savvy investors.

 

[Azure]

You miss

In what way did you dabble in Real Estate?

I'm always curious what someone means when they say they used to "dabble" in something.

You missed the best part. He dabbled in real estate earlier this year. How you can do anything in real estate for a few months is beyond me.

 

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[TheNextTrump]

Why? It's arbitrage.

I took it as,
Buy a mobile home that's worth $2-$5k in it's current condition. Do zero repairs, track down some dough a$$ and "finance" it for triple the cost.

_________________________________________

If the mobile home is worth $15,000 but the seller cannot sell it because most buyers don't have $15,000 cash and there is absolutely NO financing to buy a used mobile homes. They it helps the seller a lot when an investor can buy for $5,000 cash. It is more cash than the seller could get from most mobile home buyers.

This makes sense, I just didn't realize owners would drop so low for cash.

Is it common for MH owners to sell a $15k MH for $5k cash? (Or roughly a 1/3 of market value.)

True story, I just seen this done locally. Just wasn't sure what had happened.

Had been looking at a MH for $18k, was on the market for months.
Disappeared, and about two weeks later it was relisted offering "owner financing"

 

[csalvato]

I took it as,
Buy a mobile home that's worth $2-$5k in it's current condition. Do zero repairs, track down some dough a$$ and "finance" it for triple the cost.

That's pretty much it. Why's that unethical? It's textbook arbitrage. Buy low sell high. That MH was just purchased at a discount, which helped the seller. You sell it at a profit, which helps the buyer. You're a deal maker.

What's wrong with that?

 

[Niptuck MD]

I just got 20+ mobile home leads all between $500 to $5,000. If anyone is interested in doing some "Lonnie Deals" these would be ideal.

So, what is a Lonnie Deal ( named after Lonnie Scruggs) - you buy an older mobile home for $2,000 to $5,000. Do NO repairs. Then advertise it for sale with seller financing fpr 2 to 3 times more than you bought it for. You will usually sell within a week, get $2,000 to $5,000 down, then get monthly cash flow of $250 to $500 a month. You usually get all the cash you used to buy the mobile home back with the down payment of your buyer but sometimes it takes 6 months to get all your cash out.

The reason this works so well is because it is very hard to get bank financing for a property under $50,000. So the seller financing is super appealing to first time home buyers.

In Florida especially you do run in to the (nice) problem, that you buy the mobile home for $3,000 then advertise it for sale with seller financing for $9,500 and the buyer wants to pay CASH. Lots of snow birds in Florida.

Lonnie Deals are an affordable way to get started in real estate investing.

good information thank you for this insight

 

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[TheNextTrump]

That's pretty much it. Why's that unethical? It's textbook arbitrage. Buy low sell high. That MH was just purchased at a discount, which helped the seller. You sell it at a profit, which helps the buyer. You're a deal maker.
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What's wrong with that?

I wouldn't call it textbook, but that's just me.

I'll try to explain what I'm saying is unethical here quick, if you still disagree, that's ok. We will agree to disagree.
Example A = What I feel is legit. Example B = What I feel is crooked, side ways and horrible business.

Example A)
MH is on the market for $15k. This MH is priced right at market value, and is essentially turn key.

I come in with an offer of $5k in 100 dollar bills, OWNER accepts offer.

After purchasing for $5k, I relist for $15k with OWNER financing. MH sales in 1 week, and I profit roughly $10k when its all said and done.

Example B)

MH is on the market for $5k. MH is priced right, and is a complete junk MH, many issues and things that need to be fixed.

I purchase this MH for $5k, and then relist it for $15k with owner financing.

I intentionally don't fix any of the issues, and inflate the cost by $10k.

I find a buyer, and profit $10k when it's all said and done.
___________________________________________________

I have a business that is built around "buying low and selling high". So no issue there.

 

[csalvato]

Example B)

MH is on the market for $5k. MH is priced right, and is a complete junk MH, many issues and things that need to be fixed.

I purchase this MH for $5k, and then relist it for $15k with owner financing.

I intentionally don't fix any of the issues, and inflate the cost by $10k.

I find a buyer, and profit $10k when it's all said and done.

It seems like you think buying a junk house then selling it without fixing it is unethical. First off, the definition of arbitrage, which are both agreeing is 100% legit, is as follows:

arbitrage
noun

the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.

Even in example B, that's what you are doing. Legit, pure, ethical arbitrage.

If you are disclosing the as-is condition of the house, disclosing all of the issues that need to be fixed, and can still sell it at $15K with owner financing, then nothing you are doing is unethical.

In fact, I would wager that, in most cases, if you tell the owner/seller that they could do this kind of thing on their own and without you, they wouldn't want to. It sounds complicated, and a lot of work, and they just want this property off their hands.

They don't want to be signing contracts and arranging deals. They want this thing sold and gone and get on with their life and get some cash out of it.

In other words, if you are disclosing all of the facts that make the house a piece of junk, and you can still sell it, I don't see why it's unethical.

 

[TheNextTrump]

if you are disclosing all of the facts that make the house a piece of junk, and you can still sell it, I don't see why it's unethical.

As long as all of the issues are disclosed, I see nothing wrong with it, and agree its basic arbitrage.

My kicker, was buying junk, not fixing it, then peddling it off "w/o" disclosing all the stuff that's wrong with it.

Basically finding some ding dong, that doesn't have a clue if a water heater is fully functioning, foundation is in tact etc.
I'd imagine as with real estate, the MH would need to be "inspected" so that eliminates my worry there, but you never know with MH's.

Anyway, thanks for the healthy discussion.

At the end of the day, I'm chasing million dollar goals and "getting up" on some one isn't a worry in my book.

Capitalizing on an individual for profit, isn't a worry in my book. Paying some one well below what an item is worth, then flipping it for 3x the cost isn't a worry in my book.

Being shady about these tactics is what I don't agree with, but (wadda ya gonna do) - Tony Soprano voice.

____________________________________

the good news, there seems to be some solid opportunity in the MH market. I've considered getting into the game, but never contemplated the "owner financing" side of things. Could be a lucrative cash stream if done properly.

As well as other items, say a guy were to buy some high end appliances, then owner finance them for say 20-30% over cost. Bada Bing Bada Boom.

 

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[Jon L]

It seems like you think buying a junk house then selling it without fixing it is unethical. First off, the definition of arbitrage, which are both agreeing is 100% legit, is as follows:



Even in example B, that's what you are doing. Legit, pure, ethical arbitrage.

If you are disclosing the as-is condition of the house, disclosing all of the issues that need to be fixed, and can still sell it at $15K with owner financing, then nothing you are doing is unethical.

In fact, I would wager that, in most cases, if you tell the owner/seller that they could do this kind of thing on their own and without you, they wouldn't want to. It sounds complicated, and a lot of work, and they just want this property off their hands.

They don't want to be signing contracts and arranging deals. They want this thing sold and gone and get on with their life and get some cash out of it.

In other words, if you are disclosing all of the facts that make the house a piece of junk, and you can still sell it, I don't see why it's unethical.

this is how all business works - provide something that you can get cheaply and find a buyer for it that is willing to pay more for it. The value that's being provided in this case is the monthly payment amount. The buyer can't afford to pay $5000 up front, but they can make payments. The seller is taking a pretty significant risk by financing a low-income buyer, so they're entitled to get paid for that risk.

When I was in college, I worked for a guy that bought and sold mobile homes. My job was to fix them up. Trust me when I say that buyers can pretty seriously mess up a mobile home.