Unusual business model


#1

I recently attended the annual conference put on by the Ohio Manufactured Homes Association. One of the speakers had the most amazing business model I have ever heard of and want to share it with everyone. I’m trying to get him to come to MOM also.

First I have to tell you that he is an ex-IRS agent, an accountant and an attorney. Rather smart fellow. As I understand his plan, he buys rundown parks and does what he has to to make them pretty and fix any infrastructure problems. Then he buys homes and places them. These are in decent and livable condition but nothing top-of-the-line. Next step is where the genius comes in: He works with a social services agency to find people in need of housing. The agency does all the tenant locating work but he still screens for criminal history. When an acceptable resident is found for a particular home, he donates the home to the agency for charitable donation tax deduction and then the agency titles it in the name of the new residents. He then sells the fully leased park as a turn-key operation.

The single biggest problem according to the speaker was finding an agency to work with. He had nothing good to say about United Way. The one he does business with also helps people with other problems in their lives and takes care of problems like budgeting for their clients. The last park involved giving away 70 homes and he had 3 come back but 2 of those were for family reasons where the residents had to move immediately. Only one turned out to be a flake.

A side benefit to all this is the amount of free publicity he has received from the local newspapers and a 90 second spot on NBC Nightly News.

The above is a really rough outline and I’m hoping he can come down to MOM and better explain everything. I had my jaw on the floor listening to this presentation as I could see how it could benefit me in my park so I probably missed as much as I understood. You have to admit this is a really creative way to do business.

Rolf

Wheat Hill MHC

(330) 426-9558


#2

Thanks for sharing Rolf. It’s always good to hear innovative ideas such as this.

I just don’t know how it would work. Let’s say the home costs around $8,000 and he needs to fill up 20 homes. That’s $160,000. How would the tax deduction give him back his $160,000 liquid cash?

I’m trying my best to arrange my schedule to come to MOM. Would love to hear him talk about it there.

Good luck with getting him there. Tell him I’ll buy him dinner if he comes!


#3

I got the impression the tax deduction was simply the icing on the cake. The real purpose was to sell a fully leased park with no rentals. This would make it easier for a buyer to obtain financing.

The hard part, I think, would be to come up with the money to start the ball rolling in the first place. Once that first park is completed and sold, future ones should be a lot easier.

Rolf


#4

Rick,

Run the #'s to see the exit strategy.

Your example was 20 lots filled @ say 200 per month ~ brings 4,000 per month x 12 or 48000 in income. Some might argue that all of this flows to the bottom line but even at 70% = 33,600. So the park is now filled and he exits at a 8- 10 cap since investors will pay for turn key parks.

Depending on the buyer he makes 300-500K less the $160K cash (which he got special tax treatment on).

Karl


#5

The cash to start the ball rolling is were I hit the road block with this business model. That doesnt mean it cant be done. I learn something new almost everyday in this business. If I were to apply this give away home business model to my park I would need over $1 mil to get the job done. I cant wait to hear this speaker. Rolf get the man to the Athens MOM

Rick


#6

Should have thought that through. I keep thinking in terms of holding a property instead of selling.

I ran the numbers though the park I’m looking at and if I was to fill all the vacancies I would see a $250,000 profit margin after buying $500,000 in homes.

Interesting idea.


#7

I am a novice and have a lot to learn. There is probably hardly anything in my presentation which would be of particular benefit to the MOM attendees. I will gladly forfeit my time allotment so we can all listen to an experienced man who seems to offer a road map to a gold mine. I would love to listen to him. However, since Mr. Mead is the organizer of the MOM meeting, we have to leave to him the organization.

Alexander Hanak


#8

Alexander,

I will beg to differ! You need to be speaking at this event, what you have to say might already be in the heads of most of the people living this business BUT for the people that are just getting started or trying to judge if this is something they want to pursue YOU are the perfect Speaker!

You are a true inspiration to most of us and so far off the beaten path of “normal job progression” today that it takes my breath away… Let’s see we’ve got a 17 year old that grosses more per month than most of working America, will likely never have to have a “real job”, and will likely be in the top 25 percent of american tax returns by the time he’s 20… It’s a no brainier to me, I wanna hear what ya got to say!

The neat part about MOM is there is no particular hard and fast timeline, I’d love to hear this fella as well and if he can make it there will be a slot but personally I think more people overall will benefit from listening to you.

Best wishes,

Ryan Needler


#9

our keynote Speaker. I hear of these kinds of things all the time and I take them with an air of wonder. How much money does a person need to have to be able to afford to bring in say 20 homes (200-300K) and give them away?

Sure, at sale some portion of this will be recouped, so will selling on Note with nothing down and even 100 per month for home alone plus lot rent. See where I am going? Giving anything away for free has had VERY bad consequences for me. I like people to have skin in the game to keep us on a certain parity.

I have picked my picks for MOM. I would like to hear what this fellow has to say in a side venue. I try to be very careful to select folks that have proven track records to speak at these events. And I don’t mean hear it from a friend who heard it from a friend. I have been to over 40 properties and towns from posters and friends on this site not to establish bona fides but to learn.

I’m curious Rolf, did he give this outlined business model out for free or does he sell a course and give seminars? And if you don’t mind, what is his name?

As a side note, selling a 15K cost basis mobile for 3K (nothing down 100 per month no interest) would give a 12K loss to a P&L with no limit. Isn’t there a limit to charitable contribution?

Regards,

Greg