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- Jun 7, 2008
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Well, I haven't been around here much lately, but that is because I have taken my first action and man was it great! I bought a mobile home here in Iowa City (a few miles from my University Campus) and I sold it for a large profit on a note (Lonnie Deal). I learned so much in the process, and I am proud to say I did it all on my own before my 20th birthday.
THE PROCESS:
In October I visited all the local mobile home parks in Iowa City to find out which ones I liked the most. I met with the owners of the park and explained to them the types of deals I do and how I could keep the lot rent coming in to them on the older homes for sale in their parks. I also visited all of the local reputable dealers and let them know what I intended to do, and that I would give them a finders fee for leads to deals. I met some great entrepreneurs in the process, including the HAMES family, who sell just about every mobile home here in Iowa City and Cedar Rapids.
MY ADVERTISEMENT:
To properly evaluate the demand in my marketplace I posted an ad on craigslist titled "WILL FINANCE, 1980 Mobile Home, 14x70" and I crammed a few more words in until I ran out of title space. At this point, I did not own any mobile homes, and when people would call I would tell them the home in the ad is currently under contract, but that I would have another home available soon. I would then get all of their info, and add it to my growing buyers list.
THE HOME
Next, I searched craigslist for used mobile homes in the area and found about 5 that I wanted to look at in the parks that I liked. The first one I called on was owned by a bank (good news, a non-performing asset for the bank meant big room for me in my negotiations.) It was a 1979 American Motors Mobile Home. 14 x 70 size. 3 beds, 1-1/2 baths, fireplace, newer appliances, and a price tag of $7000.
The bank sent me pictures and told me the padlock code so I could check everything out. I was excited when the home was in good condition on the inside, but I didn't let the bank know this when calling back to make my offer.
November 1st: I offered them $3000 cash for the home. The bank came down quickly to $4000. I told them I had no more than $3500 and that I could get it to them in 24 hours. The banker said he would get back to me. He called about 10 minutes later and said after looking over their financials they could accept no lower than $5500 for the home.
I was disheartened to learn that I wouldn't be getting the home, since I already had multiple buyers lining up, but I wouldn't let that get me down. I made sure I was courteous with the banker and let him know that my offer of $3500 cash still stands, and to call me when they are having trouble selling (NO ONE has cash in this market, especially the people looking to purchase a mobile home.)
My search continued.
FLASH FORWARD:
November 20th: The banker e-mails me saying, "We accept your offer of $3500, please call me to finalize the deal."
I was jumping for joy now! I called the first buyer on my list and told him I had a mobile home for sale for $6900 and gave him all the details. He was very excited and told me to let him know what I need from him.
Jump forwards a week after a lot of sleep and turkey and :smx6:.
I got a cashiers check for $3500 and went down to get the title from the bank. I made them sign a buyers agreement with all my terms (If the home needed to be moved the sale was void, etc etc.) They signed the title so I could put it in the new owners name, and I gave them the check. I was a property owner!
That night I met with my buyer and structured the note payable. He had a down payment of $1500.
THE NOTE:
The note was structured as follows:
Amount: $5400.00
Interest: 10.0%
Term: 36 months
Loan Payment: $174.24
Total Cost of loan: $6272.74
Plus Down Pay: $1500.00
Total Gross: $7772.74
Less Cost: $3500.00
Net Profit: $4272.74
Factor in gas and it comes out to around $4200.00 profit for 12 hours of work. The best part is my buyer wants to pay off the note in 6 months so he can get into a house. While this means less interest for me, I will have more than double the cash I started with in a few short months. Cash now is worth more than cash later! My buyer and his wife are from Columbia and they are very nice people. I got them a bottle of wine the night they signed the note. They were so happy to have their own place after living in an apartment for 2 years and having rent checks go to a landlord.
My buyer wants me to help him find his house once the home is paid off, and if I have my real estate license by then I will make a nice commission!
For those of you reading this who are scared to get out there and take a chance JUST DO IT! It was so worth it. I gained a lot of experience on this deal and I loved the feeling I got doing it, it just reassures the line of work I am going into (investment properties).
The worst that could have happened was I would have lost $3500 and gained experience.
NEXT STEP:
Buy a 3-4 unit rental building here in Iowa City and rent to the kids on my campus!
All the best :cheers:,
G. Alexander
THE PROCESS:
In October I visited all the local mobile home parks in Iowa City to find out which ones I liked the most. I met with the owners of the park and explained to them the types of deals I do and how I could keep the lot rent coming in to them on the older homes for sale in their parks. I also visited all of the local reputable dealers and let them know what I intended to do, and that I would give them a finders fee for leads to deals. I met some great entrepreneurs in the process, including the HAMES family, who sell just about every mobile home here in Iowa City and Cedar Rapids.
MY ADVERTISEMENT:
To properly evaluate the demand in my marketplace I posted an ad on craigslist titled "WILL FINANCE, 1980 Mobile Home, 14x70" and I crammed a few more words in until I ran out of title space. At this point, I did not own any mobile homes, and when people would call I would tell them the home in the ad is currently under contract, but that I would have another home available soon. I would then get all of their info, and add it to my growing buyers list.
THE HOME
Next, I searched craigslist for used mobile homes in the area and found about 5 that I wanted to look at in the parks that I liked. The first one I called on was owned by a bank (good news, a non-performing asset for the bank meant big room for me in my negotiations.) It was a 1979 American Motors Mobile Home. 14 x 70 size. 3 beds, 1-1/2 baths, fireplace, newer appliances, and a price tag of $7000.
The bank sent me pictures and told me the padlock code so I could check everything out. I was excited when the home was in good condition on the inside, but I didn't let the bank know this when calling back to make my offer.
November 1st: I offered them $3000 cash for the home. The bank came down quickly to $4000. I told them I had no more than $3500 and that I could get it to them in 24 hours. The banker said he would get back to me. He called about 10 minutes later and said after looking over their financials they could accept no lower than $5500 for the home.
I was disheartened to learn that I wouldn't be getting the home, since I already had multiple buyers lining up, but I wouldn't let that get me down. I made sure I was courteous with the banker and let him know that my offer of $3500 cash still stands, and to call me when they are having trouble selling (NO ONE has cash in this market, especially the people looking to purchase a mobile home.)
My search continued.
FLASH FORWARD:
November 20th: The banker e-mails me saying, "We accept your offer of $3500, please call me to finalize the deal."
I was jumping for joy now! I called the first buyer on my list and told him I had a mobile home for sale for $6900 and gave him all the details. He was very excited and told me to let him know what I need from him.
Jump forwards a week after a lot of sleep and turkey and :smx6:.
I got a cashiers check for $3500 and went down to get the title from the bank. I made them sign a buyers agreement with all my terms (If the home needed to be moved the sale was void, etc etc.) They signed the title so I could put it in the new owners name, and I gave them the check. I was a property owner!
That night I met with my buyer and structured the note payable. He had a down payment of $1500.
THE NOTE:
The note was structured as follows:
Amount: $5400.00
Interest: 10.0%
Term: 36 months
Loan Payment: $174.24
Total Cost of loan: $6272.74
Plus Down Pay: $1500.00
Total Gross: $7772.74
Less Cost: $3500.00
Net Profit: $4272.74
Factor in gas and it comes out to around $4200.00 profit for 12 hours of work. The best part is my buyer wants to pay off the note in 6 months so he can get into a house. While this means less interest for me, I will have more than double the cash I started with in a few short months. Cash now is worth more than cash later! My buyer and his wife are from Columbia and they are very nice people. I got them a bottle of wine the night they signed the note. They were so happy to have their own place after living in an apartment for 2 years and having rent checks go to a landlord.
My buyer wants me to help him find his house once the home is paid off, and if I have my real estate license by then I will make a nice commission!
For those of you reading this who are scared to get out there and take a chance JUST DO IT! It was so worth it. I gained a lot of experience on this deal and I loved the feeling I got doing it, it just reassures the line of work I am going into (investment properties).
The worst that could have happened was I would have lost $3500 and gained experience.
NEXT STEP:
Buy a 3-4 unit rental building here in Iowa City and rent to the kids on my campus!
All the best :cheers:,
G. Alexander
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