Teleseminar non-believer..LOL

mobile home university
1

First of all, I enjoy reading the teleseminars, articles and forum. I’m just writing some constructive criticism and see how people respond. I’m not trying to step on anyones toes here.

First of all. Nobody here seems to deal with the reality that ANYONE buying a park needs lots and lots of money.

Ok, I listened to Rick Ewens teleseminar. He seems to bought a nice park. Good upside, new infrastructure, etc. Trouble is to MOST people that deal is not a deal. The ONLY reason its a deal is because either Rick or his partner (I think his partner) has TONS of money ready to buy homes. Without a wealthy backer or a good finance company that deal is negative cashflow. If you bought in homes strictly from the cashflow you’d be in the red for years and years. Anybody can buy repo’s even cross country if you got a big wad of cash for cheap and move them in, settup and fill with tenants. The problem is the HUGE amount of money you need. Sure I’ve bought 5 or 6 homes from Conseco and that about killed me for 3 full years because everytime you buy, move, settup and remodel a home you need 10,000 or more cash for ONE house. Guess what happens if you got a deadbeat or do a few evictions? Now if Rick got in on the deal for ONLY sweat equity and doesn’t have to put up his own money then he got one HELL of a deal, but thats 1 in a million to have a partner that generous.

That line of credit from Clayton seems awesome, but you’d have to have a huge balance sheet. I know guys who have 10+ years of owning and managing parks who don’t have that luxury.

The guy from Florida teleseminar was great. He seemed to have a nice downpayment and bought a nice cashflowing property. I enjoyed the candor. But lets not kid ourself- he had to have awesome credit and several hundred thousand dollars to put down.

Now some guys do lease options and that sort of stuff like Greg Meade. It seems like a lot of smoke and mirrors. Who wants to invest the money to move in homes in a park that your RENTING? If you don’t exercise the option you’ve lost all that money. A serious investor would BUY the park from the beginning using seller financing. Bite the bullet and get it over with. A park you could L/O for nothing has to have serious issues that will take lots of money to fix.

2

Eddie, I agree. I have done land home packages and found the best method is to rent the mobile ot a good prospect, work with them and eventually hold the mortgage after they have some cash equity in the property. Even then I have 30 to 50K invested in an appreciating property, so the cash goes quickly. I have even gotten some great owner finance deals on land home package and great deals from Greentree (back in the good old days). However the cash flow is marginal at the beginning and you have to be in a appreciating location where the actual (land) and improvements are the appreciating asset and you need to know when to sell as well as buy. I think a lot of the mobile home park deals are based on the next bigger fool theory unless like you state, you have really deep pockets or get extremely lucky. It is just like me, I give someone a lease purchase opition to buy my mobile , i paid 40k , they have a lease purchase agreement to buy in 3 to 5 years for 70k at 8 percent, I will work the numbers any way to get me my monthly payment of whatever the traffic will bear. Whenever I have bought a lease opition (and I have) usually there is a reason the person has to resort to lease opition ( and it usually getting someone who can finance or is a good risk.) I would guess most park owners go in and within 3 to 5 years are looking to sell the park. This board and the books and all the information here is valid and will work ------If and it is a big if , you know it is not easy, it requires a lot of work and knowledge, you understand the nature on mobiles and land appreciation. If you want to put the time, effort, and money into a park I am sure it can be a winner for som but mostly deep pockets will prevail. Most of the knowledgeable people here urge people to do a few Lonnie deals and tip toe into the business. That is great advice. I am thankful that the mobiles are overlooked by many investors and I found a good little business and make and made money on land home packs and individual rentals but it is not easy or automatic but nothing worth while is. Actually that is why I feel betrayed by the bankers, mortgage brokers, big business who have destroyed my faith in the great captialist system that has done so much for me. Their greed, disregard for morality and ethics may have damaged our country beyond repair. I am a single base player who goes for singles not home runs. If I can postive cash flow for even one hundred dollars for a couple years and then hold the mortgage with a good risk, that is what I do. My magic number was ten mortgages I am holding that give me good (not great income). Better than an IRA, but taking calulated risk, borrowing and work made up for lack of cash at the beginning but it took time. Again I agree with your basic premise for most people.

3

Eddie,

You are going on half myth’s, half truths, with a good dose of reality tossed in…

First off you are 100% correct, turning a park around is VERY expensive and time consuming… It takes a certain type of person to pull it off, if someone is looking for the easy road this is not it!

You are correct that good partnerships make deals work that otherwise wouldn’t BUT it’s not a one in a million chance. The folks that can pull off partnership deals have put in the legwork on smaller deals using their own money, credit, or just pure tenacity. They network at events with other like-minded people and try to learn as much as they can about the business. A prime example is Babacar who is doing Lonnie deals for a couple hundred bucks apiece, time is the only obstacle before his deals start getting bigger.

I

4

Ryan, You should be the next teleseminar guest! Tell the world your story, how you started without a pile of money. Just some knowledge and drive. Also the blogs need some new faces/stories and I think your’s would be a very interesting educational business to follow. With the shape the economy is in people (newbies) need to believe they can do it by their own bootstraps.

Don

(who wishes it would warm up just enough to melt the frost so he dig an electric line trench, finish the unit and get it rented for God’s sake)

5

In Lonnie’s book park ownership is counted as something to invest your LD profits in long term. I think it is important to keep in mind that although Mr. Scruggs reccomends MHP’s, He didn’t buy one…apparantly the timing and opportunities weren’t right for him.

Greg’s MHP L/O ideas are great, but clearly not for beginers. Consider the sellers point of view; A lease-option with an established, experienced, well-capitalized leasee, will in all probability result in a delayed sale. A MHP leasee with option that is inexperienced and under-capitalized will most likely result in the seller being required to re-start his own management and rebuild what had been lost by the L/O operator.

In my view,ease of entry for beginers usually results in failure.

If you don’t have the money to buy a MHP, focus on LD’s until you do have the money. By that time, you will also have gained the skills and knowledge that are required to succeed in MHP investing. G.O.T.C.

6

Eddie,

One isn’t required to believe in the teleseminar, Rick, Ryan, Greg, Don, Babacar or anyone else. One only has to believe in himself.

Read Ryan’s and Don’s posts again. It isn’t about believing in anyone else’s plan that makes it work.

Steve

7

I feel the need to respond to this post for clarity reasons. I wouldn

8

Don,

That’s funny, I’m having the exact same problem in OH:-)

Rolf

Wheat Hill

9

Eddie,

You are far more right than you are wrong and I speak from the vantage point of someone in the trenches every single day including week-ends and holidays. No-one ever tells you about having to fix a broken water line on Christmas day when the temperature is -1 F. Or watching your waist line shrink due to not having the money to afford enough food. Or seeing your credit score go from 800 down to below the charts as you struggle to hold a community together as the economy tanks. I could go on but I think you get the idea.

This business is much tougher than it is promoted to be and there ain’t nobody out there “quietly making huge profits” without some huge sacrifices. You CAN make good money but both the financial and non-financial costs are very high. The learning curve is horrible and you can lose everything in this “little risk” business just as easily as in any other.

Don’t give up on this business as there can be some serious money to be made but take everything the “successful” people say with a huge grain of salt. It’s not that they are lying as this community is very open and giving. My own community is finally starting to turn around in great part due to the advice I have gotten from others. Just always remember when you read about someone’s success that you are getting far from the full story. Keep reading and learning and ease into the business if you think it is one that you think will work for you. Just maintain your obvious skepticism for all the “rah-rah” you see.

Rolf

Wheat Hill

11

One thing we as investors must avoid is the Self Employed Slave business model. I dont really call this investing I call it buying a job - NO THANKS that business model is not for me.

Rolf I dont know where you are located, but I have to tell you there are people making lots of money in this business today.

I am sure many of us have made some business mistakes, but not all of us try to spread the cloud of doom and gloom.

To anyone that is serious about investing in this business my business is an open book with no hidden grains of salt. I have nothing to sell or RAH RAH about. The economy is bad but the glass is still half full.

Garry if you are in this business great and if you are considering the business dont cut corners get educated. Use other peoples mistakes/ lessons to your advantage.

Like Rolf says the MHP business is not easy, but I hear jobs are not that much fun either.

Best of Luck

Rick Ewens

Post Edited (02-26-09 07:00)

12

trying to talk yourself OUT of investing with mobiles. I did the same exact thing early on (still if I’m not careful). My one and only L/O of a MHP is exactly like this:

26 space Park (25 Park Owned)

L/O for 580K with 1K as Option consideration (down)

Can pull option trigger any time between years 5-7.

fully rented brings in 17,230 per month

lease amount (inc. 1/12 ins and taxes) is 5661 per month

closed Aug 1, 2008 first payment due 8/15/08

had collected over 13K before first payment was due.

Have NETTED 121K since closing.

Have 5+ years left on this deal

What did I have to do to find this deal? Looked at over 70 MHP and made over 40 offers. Time spent? 400+ hours (mostly driving). I have since found four others in similiar demos and will close one of these this year.

To recap I spent 1K (oc) and 2k legal. Have since made my money back 40X. In your post you state what happens if I don’t exercise this Option as losing a lot of cash. I just don’t see this. I hope to have collected over 450K in this time (Net money BTW) and all of this with less than 3k out of pocket. I really wouldn’t mind a loss like this.

Eddie, there are things that are very hard to quantify. Things like…"how many Parks are out there like this looking for a new Owner? My guess is there are thousands nationwide.

Am I a genius? No. probably not even in the top 25% of peeps nationwide. I educated myself and in the past 6 years I went to lots of events and as Rick states I changed my peer group.

Rather than looking for reasons NOT to do deals, I have tried to approach each new deal as a challenge to find the key that will unlock the profit.

Lack of money is probably the most widely used excuse NOT to do a deal (take action). I absolutely guarantee a “real deal” with ALWAYS find financing. There is too much money looking for a profitable home out there.

Having lots of money makes investing fairly easy, but where is the challenge in that? My heroes are the folks from this forum that have made millions using OPM. They share common traits…honest, straight talking, accesible, optimists, willing to try new things, won’t take no for an answer, can see the big pic, will do the leg work, NOT LAZY, and don’t expect a deal to be handed to them with very little effort on their part.

There are basically three types of people out there Eddie.

Folks that watch things happen

Folks that make things happen

Folks that wonder what happened

I guess for me that was the real question…which of these folks did I want to be???

Good Luck

Greg

13

Greg, I know you know this business. However I think what Eddie is trying to express ( in my opinion) and I think it is valid is sometimes I cannot follow the ball or the numbers on some of the deals. On your lease opition which is great here is what I understand, so tell me if I am not understanding or you left something out,

#1— you got a lease opition for a total of 3K out of pocket. This gives you the right to purchase after 5 years for 580k (am I correct) or or are you payng some of the 580K out of the monthly $5660 payment? i am just not clear on it.

#2 So you have all rented out at $622 monthly (622x26 = 17300) that is pretty good rent for I would assume older mobiles. Have you had any maintaince issues or sitting vacants? So you have 7 months of 17300 payments since august for total of 121,000 which is gross, not net. Your net is about 81K assuming no expenses at all. Am I on track? So your net is about 11,600 monthly, which is great and what a deal.

#3 If you pay the owner 5660 monthly for 60 months he gets about 339k in payments alone, am I correct. So if you are not paying any principle on the 580K he will walk away after 5 years with 580 plus 339K in payments for a total of abut 917K which is pretty good. now I am guessing there is no amortization at all, it is interest only.

#4 Now as the seller he is getting about 22k per mobile and lot (22k x 26 mobilies on improved lots) equals about 572k or so, now if the mobiles have age and wear the appreciating asset has to be the land. Like Eddies point only someone like a Greg Meade could get mobiles in place at a reasonable price, that is why a deal like this would work for you.

#5 The seller is trusting you to maintain his property, protect his investment, and keep it rented. he is taking the risk that you (and I know you would not) could ride the park into the dust and just suck out the profits for a year or so and walk away, you made money with a 3K investment. But if you buy or even flip it to someone else I think the seller still did pretty well if he bought right. Like Lonnie says you make your money when you buy. But he is making monthly income, has no day to day worries and stands to get property back after pocketing 339k after 5 years or so.

#6 So to sum up, Eddie is just stating that there is so much more involved other than a think rich and grow rich attitude. I love the attitude and knowledge on this board, however I know not everyone can be a Greg, Tony, Ryan, Lin etc. Deep pockets and a long term horizion are the key to owning most parks. Rolf I am sure is correct , you can get in but you have bought a 24/7 job for quite a while. Are the rewards there of course, but we must create wealth not the illusion of wealth as wall steet has done for the past decade. They just moved paper with nothing standing behind it. Small land home packages with a flip when you make enough to pay for the effort is a safe non stress way to go go, one at a time, 4 singles equal one home run and you can sleep.Greg Meade wrote:

trying to talk yourself OUT of investing with mobiles. I did

the same exact thing early on (still if I’m not careful). My

one and only L/O of a MHP is exactly like this:

26 space Park (25 Park Owned)

L/O for 580K with 1K as Option consideration (down)

Can pull option trigger any time between years 5-7.

fully rented brings in 17,230 per month

lease amount (inc. 1/12 ins and taxes) is 5661 per month

closed Aug 1, 2008 first payment due 8/15/08

had collected over 13K before first payment was due.

Have NETTED 121K since closing.

Have 5+ years left on this deal

What did I have to do to find this deal? Looked at over 70 MHP

and made over 40 offers. Time spent? 400+ hours (mostly

driving). I have since found four others in similiar demos and

will close one of these this year.

To recap I spent 1K (oc) and 2k legal. Have since made my money

back 40X. In your post you state what happens if I don’t

exercise this Option as losing a lot of cash. I just don’t see

this. I hope to have collected over 450K in this time (Net

money BTW) and all of this with less than 3k out of pocket. I

really wouldn’t mind a loss like this.

Eddie, there are things that are very hard to quantify. Things

like…"how many Parks are out there like this looking for a

new Owner? My guess is there are thousands nationwide.

Am I a genius? No. probably not even in the top 25% of peeps

nationwide. I educated myself and in the past 6 years I went to

lots of events and as Rick states I changed my peer group.

Rather than looking for reasons NOT to do deals, I have tried

to approach each new deal as a challenge to find the key that

will unlock the profit.

Lack of money is probably the most widely used excuse NOT to do

a deal (take action). I absolutely guarantee a “real deal” with

ALWAYS find financing. There is too much money looking for a

profitable home out there.

Having lots of money makes investing fairly easy, but where is

the challenge in that? My heroes are the folks from this forum

that have made millions using OPM. They share common

traits…honest, straight talking, accesible, optimists,

willing to try new things, won’t take no for an answer, can see

the big pic, will do the leg work, NOT LAZY, and don’t expect a

deal to be handed to them with very little effort on their

part.

There are basically three types of people out there Eddie.

Folks that watch things happen

Folks that make things happen

Folks that wonder what happened

I guess for me that was the real question…which of these

folks did I want to be???

Good Luck

Greg

14

not 08. We have leased the park for about 18 months.

We have these options between the 5th and 7th year:

  1. buy the PARK FOR 580k

  2. sell the park and pay 580K to Owner of park, pocket any excess money.

  3. Turn the park back over to Owner of park.

We rent singlewides at 600 per month and doubles at 700-800 per month. The park was full of homes and tenants when I bought ooops leased. Mostly 1980s and a few 1990s. We plan on bringing in no new homes…ever. We have had average fix up costs.

The owner actually gets 4300 as lease payment…the rest is insurance and taxes.

We have handy man (lives in park) to do leaks, carpet, minor stuff. My secretary collects rent in our office in the park 1st thru 5th. this is a beautiful Park

Garry, the point i am making is I am nothing special and can do this again and again. It does not take an extraordinary person to make money in this business, it takes tenacity. You or any investor on this Board can do these…several dozen of you have LOL!

There are several folks from this and CRE that have viewed this park…Eli Call Sandy Shear are two. It is beautiful in every way.

Anyone and I mean anyone can do this. Karl warner did my parework at 1 oclock in the morning while he was in maine.

Every person reading this post can come up with 2K (maybe borrow?). I did not need to come up 1K OC until the 15th of August after I had collected 13K for Aug. rent.

I would hate to see anyone get in over their heads here, but this is less than i paid for my first Lonnie deal. The lease is in an LLC and I have limited personal risk as much as is possible. I always prefer new folks to try a ld, then a l/h and then maybe buy a park.

I can only speak for myself, but I am the only person that can my limit my income in this busines (or life, or fun or…see where this is going?)

There are much smarter people than me doing deals many times this large every day. I like to think of myself as average in every way.

Rick said it best…minor leagues or big leagues…only we can decide the path.

Lastly, the owner will collect 361K of lease payments over 7 years. I pay no principal because i do not own one thing in the park except garbage bags and rakes.

Greg

15

Greg, you guys are too modest. To find and turn a deal like that, to get going like Ryan, Tony and several others here takes a special talent and self drive that 95 percent do not have. What a sweet deal you got but you earned it and looked for it. Thanks for the info

16

I’m just trying to be realistic. Theres always statements like 500k in equity gained or 12,000 a month cashflow thrown around, but no specific details. Thats what I was trying to uncover with this.

Greg made a sweet deal. Especially, since he didn’t have to pay anything upfront. He is essentially a NNN tenant collecting the spread with nothing at stake. What makes the deal great is not the fact he got in for nothing, but that the property actually makes money supposedly with nothing done to it.

Interesting agreement. I guess the owner is in the cat birds seat. He gets to collect lease payments and at the end of 5-7 years he either gets 580k or he gets the park. Not many sellers would even entertain the idea of doing such a deal on a park that makes money.

I’m going to take a guess and say you have no plans of ever ‘owning’ this thing. The property is maxed out and theres no upside to capture. Eventually as the rentals get older they need more and more work done to them. Getting a mortgage for 580,000 on a rental park is a challenge and the payment will surely be much higher than it is now. In 5 years the prospects for finding a buyer willing to pay 700k or more will be much higher. What do you see happening at the end of this thing?

17

We have already planned for the end of this lease. Between years 6 and seven we will attempt to sell park. It nets 81.1K per year and at a 10 cap is maybe worth 800K without seperating land from homes. We hope rents are higher in 5 years or land is worth more. If a Buyer can Not be found, in a respectful manner we will turn the Park back over to the Owner and thank him for the trust he showed us in 07. Another unwritten option is Owner may very well extend lease for another 5-7 years if this has worked well for him!

It might be worth your while to come on down and check this Park out…it really is beautiful and an investor only needs a few of these to retire.

We have taken out some trees, put up some fencing and did normal repairs. If we turn the park back it will be close to identical to the Park he leased us in 07!

Greg

18

Where is your park located Greg?