Another way to fill lots

mobile home university
1

I take no credit for this idea as Ryan Needler is the MAN! for coming up with it. Implementation was my thing.

A dealer, my landlady actually, approached me about a retired couple who wanted to buy a home but could not get financing. They had very recently completed a BK due to medical bills (another reason to vote for Obama and eventual universal health care) but had kept their previous home and a few other bills good. The home was $20K and they had $10 to put down plus a few $K in reserve. No lender would touch them.

I am and have been for some time offering $2K to anyone who brings a home into my community. What Ryan suggested was to pay that $2K to an investor to up his return as the buyers really didn’t need the money to complete the purchase/move/set-up. Here is how the deal was structured:

total price: $20K

down from buyers: $10K

note payable at 16% for 5 years: $10K

money from investor’s ROTH IRA: $8K

my money: $2K

return to investor: approx. 25%

If the buyers default, I do not charge the investor lot rent and I will assist in getting the home ready to sell and doing the marketing and applicant screening.

In the interest of full disclosure, I have to tell all of you that I provide a full concrete pad measuring 15’ X 67’. And I put in a pad for the shed made out of compacted road base and measuring 11’ X 13’. Upgraded water lines with double shut-off valves. The buyers want to put in a raised bed flower garden next year and I offered to pay for the materials and plants and long as it is next to the street for all to enjoy. In other words, I have nice lots.

Why would I do such a crazy thing? I get all my money back in less than 10 months, the home is the nicest in the park, I believe I can attract better residents with this method and I hate fixing up homes and selling them. Now I can go out to the other dealers in the area and give them a concrete example of how the program works and get them working for me to find more “make sense” deals.

Why should an investor do such a deal? 50% down, low debt/income ratio, income not based on having a job, 10 year old home in top condition, no need to go out and find a Lonnie Deal, no need to deal with loser buyers with no cash, gets to deal directly with an owner instead the PM, no lot rent if the buyers default, etc.

If it worked once, it will work again.

Rolf

Wheat Hill MHC

(330) 426-9558

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Rolf, with all due respect why go to all that trouble. Why not just go down to your local goverment and apply for welfare, food stamps, utility assistance and wait for obamas universal healthcare. Oh, and does’nt every American and illegal alike deserve free dental and death coveage. And of course we’ll have tax those greedy coporations at 95% to pay for it all. God help us, we’ve become a nation that thinks we’re all entitled. In the next few years I think we’re in for a rude awakening.

Tom

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Actually, Ryan and I were quite proud of the fact that we came up with a way for everyone to win.

  1. I spent $2K and increased the value of my community by $25K.

  2. The buyers got into their own home after losing almost everything to medical bills. (This would never have happened in any other developed country in the world.)

  3. The dealer made a sale they never expected to make.

  4. The investor loved the package and is more than willing to accept a slightly lower return in exchange for less personal involvement.

We need many more “out-of-the-box” ways to fill our parks and how to run this country. What worked in the past no longer does.

Rolf

Wheat Hill MHC

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Rolf,

Well done - my calculator says 27% for your investor! You paid 2K and get presumably 2500+ per year in rent - 120%+ return on your cash + the $25,000 equity bump. Homeowner and dealer are happy. Nice win, win, win solution.

Karl

5

I was a little confused at first since you put $10 down (and I assume you meant $10K).

So, are there many buyers that are going to have $10K available? I thought most in the category couldn’t afford such a large down payment? Maybe I’m missing something.

Sounds like a real good solution, I’m just curious if it can be done with any dependable frequency due to the large down payment.

PS…if you put unnecessary political propaganda in your post, expect to get more responses like the first one. It didn’t add to the story and had no relevance. Just my .02 like yours.

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Rolf,

You sound like you have an A+ park. As an idea to fill lots, let me run this by you (and everyone else for that matter ) just for conversation. Do you think a dealer would be interested in taking a temporary percentage of ownership in your park in exchange for bringing in homes ? For example, say your park is worth 1M, dealer agrees to take a 10% ownership in exchange for bringing in 4-5 homes at 20K each. Assuming your park is in a positive cashflow position, dealer takes 10% (or other agreed amount) of cashflow until they’re paid back their original investment plus profit. Then they release their ownerdhip. If you sell prior to them being paid off, they get paid in closing.

I would think the value you would be adding to your park would be worth giving up the temp. ownership rights as security and you would not have to come out of pocket $0.01. I wonder if any dealers would be interested and if they could “float” their return over time. Certainly they are getting motivated to move homes.

OF course the numbers could be adjusted to make sense, I’m curious of thoughts on the concept.

Keith

Post Edited (10-17-08 17:48)

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Rolf,

That sounds like a great deal for everyone. Congrats.

Here’s another idea next time you get a buyer with $10k to put down. 21st Mortgage will move a rehabbed repo home into you park on their dime for a poor credit buyer with 25%-30% down. (No other mobile home lender that I’ve ever worked with will do this as routinely as 21st). This saves you $2k, and will get you a nice newer home into your park. Check out their repo inventory at 21strepo.com, establish a relationship with the Ohio 21st repo rep, and you’re off and running. (Jim Widmeyer from 21st told me that he met you at the OHMA conference last month, so I know you have his card. Give him a call.)

Your $2k move in incentive would come in handy for the investor with the more typical $1k to $2k buyer looking for a nice place with financing. Its easy to find solutions for the buyer with $10k down. Hell, find another buyer like that, I’ll come move one of my homes into your park! Its the other 99% of the buyers with 10% down and poor credit that needs more creativity from parks owners and Lonnie Dealers. This is what we’ve been talking about for years, parks working hand in hand with Lonnie Dealers to help fill parks and make a profit for everyone. Keep the creative juices flowing.

Karl Kleiner

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Oh, how I wish I had an A+ park. Maybe someday.

Your idea is interesting and seems to make sense. Actually crunching the numbers is way over my head but there should be some way to do it to see what works. What would happen to the dealer’s ownership share if the buyers default or the home moves out?

You would think dealers would want to get into the park business or look for other ways to do business. Alas, they do not seem to want to do anything other than what they have done in the past. Just my opinion but that’s how things seem to work with all the dealers I have spoken to in this area. It took me 18 months to convince my landlady that I could do something like this. The other dealers in the area are finally going to give me a chance to speak at one of their company meetings now that I have such a transaction under my belt. I just cringe every time I think about how much business we all have lost due to their unwillingness to try something new.

Rolf

Wheat Hill MHC

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I am glad the business community is finally coming around to universal health care. It is about time. I know so many people that went BK due to medical bills as I at one time worked at a hospital doing billing and customer service. That’s why we need more government regulation and free medical care. Go Obama.

Now back to mobile homes, once Obama is finally in power it is about time also to end the the very high investment returns that you guys are earning on your investment. Making 25% to $30%, plus when you sell your mobile home park and pay the small 15% capital gains tax, is that fair?

There needs to be a limit on the money you guys earn, or higher taxes which would contribute to paying for the universial healt care.

Hopefully Obama will enact laws that will prevent the mobile home park owner raising the lot rent without a hearing and the resident imput. I feel Obama should enact lot rent control as well a evictions have gotten out of hand with the mobile home park owners, putting non payers out on the street is not the right thing to due. You guys need to work with the non payers to allow them to keep their homes.

My good friend was evicted from his mobile home park because he lost his job and could not pay the space rent. It was no fault of his own and the mobile home park owner did not really care about his situation. Hopefully Obama will deal with this issue on a more human terms.

I read the posts and I see the greed of making money is the only goal of this bullentin board, not to end human suffering.

Hopefully Obama will win by a landslide and we can put an end to this, universal health care is just a start, hopefully with revised laws the mobile home park owners will also be subject to more regulation and controls.

We need more federal laws and control and hopefully we will elect a government that will be for the people and not for the capitalist like you guys on this bullentin board.

With more regulation and control on the federal level things should get much better in the country and put some controls on guys like you that take advantage of your tenants. Obama wil see to this, he is for the people.

Wayne

Friend of an evicted mobile home park resident.

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for a second you had me going, then I realized you are putting us on. Great job.

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Wayne - Friend of an evicted mobile home park resident,

This site is an excellent resource for those of us who rely on the integrity of our tenants to pay their rent. If they don’t pay, they cannot stay. I tell my tenants in the most respectful way I can that I am not their mama so I am not responsible for them, nor am I their friend so I don’t want to hear about their problems. If this is offensive to them, I don’t really care. Bottom line, I have no problem evicting any person who for whatever reason chooses not to pay their rent. My policy is that if you are late 3 times with your rent in a 12 month period, then they need to find another place to live because you will be evicted - oh wait that is one of the rights I still have as a landlord in my state. I am upfront about this and tell every person who comes through my park. I also tell them to take time to read my lease and rules and regulations which clearly states my policy and if they are not able to pay rent on time, please do not return the application.

In regards to your inappropriate comments about your candidate of choice, let me share with you wisdom I received from one of my professors in college where I obtained dual degrees in History and Political Science, “Saints go to Heaven, Politicians go to Washington , DO NOT EVER CONFUSE THE TWO.” I strongly suggest that you go back to your elementary school years and review the true duties and powers of the President, then you will see cupcake, one man cannot do it all no matter who he or she is.

And please, please, please, let’s all keep to business at hand which is the alluring business of mobile home parks.

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Rolf

I hope you make some progress trying to convince the local dealers in your area to attempt something new ( might be old idea rehashed?) with sales and marketing. I have met with 2 dealers in my area and asked them to place their trade- in homes in my park. The last time I talked to one them he said he didnt have enough room on his lot for more trade- ins and was going to have to rent additional space to store the homes. I again offered to store them for free in my park. I even told him that I would help sell and finance them. I still dont have any dealer trade-ins in my park. I believe like you that if we work together with dealers to sell and fill our parks we will all be better off. They will have less inventory and we will have less weeds to mow.

Good Luck

Rick Ewens

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Agreed this buyer is untypical, in fact I

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Remember, Ryan, this was YOUR idea and I just implemented it. Gotta give credit where credit is due.

I don’t know just how atypical these buyers were. My landlady moves a lot of homes although sales seem to be slowing down (What a surprise!). She has always been able to sell her used SWs for cash even though this is not a well-off area. I don’t understand and probably never will. I think she has just blown off potential buyers with fewer dollars thinking that a cash buyer will come along sooner or later.

I’ll be making presentations within the next two weeks to other dealers in the area. One has already told me that financing for used homes is “impossible to get” so I know I will have receptive audiences. My ideal target market for buyers is retirees receiving SS or disability income and have managed to squirrel away a couple of $K. Like my recent buyers, a lot of these people have no bills and a good debt/income ratio. They are just simply off the radar of the dealers. If I can just get the sales people to see the potential in these people, I’ll have my park filled in no time at all.

You all will be the first to know how things work out.

Rolf

Wheat Hill MHC