First deal advice

I was offered one lot and with a mobile home on it in a mobile home park that is governed by an HOA, so it is not privately owned… Long story but I only need to pay $4000 for back taxes and it is mine. The lot is in a good park and is 1/4 acre in size. The Mobile home on the park is a single wide, and is in satisfactory condition needing skirting and entry stairs. Comparing the lot and mobile home to others in the park it is in the bottom 10%. I looked up recent sales in the park and they are averaging sales of around $70k.

I am either wanting to sell the mobile home and rent the lot or buy it and sell it asap.

Is this a deal I should go for? Should I rent the dirt or sell asap after purchase. Are there any red flags I should be aware of, especially in dealing with a single lot in a MHP not privately owned? I would be very grateful for any advice. Thank You.

I’m unclear on the ownership of the land in the deal you describe. Owning land is a good thing. Owning just the mobile home and paying rent on the land is not as good, but not necessarily a deal-killer.

But my gut is that this is probably a good deal - especially if you are a ‘newbie’ and wanting to cut your teeth on a deal. It sounds like your maximum downside is $4,000 (not that that is an insignificant sum). If nice homes in the community really sell for $70,000, then put together a repair budget (a real budget with a contractor who comes to inspect the home with you) and compare it to what you can make with the fixed-up home (put a test ad in your local CraigsList and gauge interest and pricing, also ask the park owner what he/she typically gets for down payments on rehabbed homes and how much per month).

Also read ‘Deals on Wheels’ by Lonnie Scruggs.

Then you’ll know if you can make money on this deal. And if so, then by all means, ‘gopher’ it.

; )


Thanks for you advice Jefferson! Just to clarify, I would own the land and the home. It is in a park that is not owned by one owner but each lot is owned by an individual. Land and home lots together have sold for $70k.

Well, then this deal sounds too good to be true. Most of us pay $8,000 - $20,000 per pad when acquiring a mobile home park - and that per-pad pricing typically does not include a home on the lot. If I were you, I’d do this deal (subject to thorough due diligence of course), and then either:

  1. fix the existing home and RTO it, or

  2. sell the home and have it removed, and then buy and bring in a much nicer home, and then RTO that one for a lot more money.

I’d not sell the land. I’d RTO the home and keep the lot rent stream of income ‘forever’ as opposed to selling it all to someone else.

If you don’t do this deal, then please let me know the details.

To your continued success,


I really like your ideas Jefferson especially the RTO the current home strategy. I would also considering selling the home and provide financing. How do I go about doing a RTO or seller financing with the new laws…SAFE Act and Dodd Frank?

Gopher -

I believe there are exclusions in SAFE and Dodd-Frank allowing anyone to do ONE (1) deal per year exempt from the law (e.g. a ‘little guy’ exclusion). If I understand your situation correctly, this would be your first deal this year…? If so, then I believe you are exempt from the regulations, and you just go ahead and draw up the RTO paperwork and have your buyer sign it. (I can send you my paperwork if you wish).

That said, I’m eager for Frank to weigh-in on this topic. He is more cautious, and has years more experience than I do, and he may well suggest you hire an attorney to advise and draft. Frank has also thought up a nifty ‘rent credit’ program which is not really financing and seems to solve the regulatory issues entirely.

All of that said, and not to tempt fate, I still have yet to hear of a single person prosecuted or even questioned under SAFE or Dodd-Frank for RTOing a mobile home. The laws are contradictory and vague in places, and there have been several amendments introduced to specifically exclude manufactured housing and/or any deal where the sale price is less than $50,000 (which would be most MH deals). Of course, an amendment is not a passed law.

Your mileage may vary, and I am NOT an attorney.


At an RE meeting last week an attorney was discussing the SAFE act. In a nutshell, any form of financing for real estate, no matter what you call it, falls under the SAFE act. If you receive payments secured by real estate, then it falls under the SAFE act. He did say there is an exemption of up to 5 per year per entity. So if you have 5 LLCs, each LLC could do 5 per year. He recommended keeping things simple by not charging an interest rate per se, but selling the MH in equal monthly payments. You could keep the land, RTO the home for payments they can afford until its paid off. Say $300/month for 84 months? You also rent him the land for market rate. In 7 years you have collected $25000 for the home plus rents.

Again, this isn’t legal advise from me. Always best to double check with your attorney.

Talk to your state MHA regarding the SAFE Act. Gather all the facts and make a decision based on those facts. I am unaware of any exclusions under the SAFE Act based on the number of transactions per year. But I have not kept up to date on the way the states have been interpreting and enacting it. I think the key decision any park operator has to make is to become SAFE Act compliant or to get out of the “mortgage business” and just go back to renting homes. As long as you set reasonable rules for how the repair and maintenance works (in our rentals, for example, we do the “large” repairs (furnace, A/C, roofs, etc.) and the tenants does the “small” repairs (drawers, doors, etc.), there really is not a big difference between renting and selling – the tenants seems to stick at the same rate. The biggest difference between renting and “selling” – and probably the most important difference – is not related to SAFE at all, and that’s the difference between an eviction and a foreclosure. The foreclosure process in the U.S. has become impossible, between all the “robo-signing” lawsuits and new legislation. To be honest, even if SAFE had never come to exist, we would have probably retreated to renting homes due to the difficulty in foreclosure, and our preference to get someone out fast who will not pay rent, as opposed to letting them live in the park for free for six months or more while trying to get a foreclosure.

I do think that there will be changes to SAFE over time (the $50,000 exclusion, etc.), but we would not go back to mortgages until the foreclosure process is fixed – and we don’t see that ever happening. So maybe the SAFE Act was a blessing, because it made all of us re-think what we were doing in light of a continuing hostility to providing credit to people who really don’t warrant it. It will be interesting to see what happens when the government realizes that they have made a terrible mistake in allowing the court system to destroy the marketplace for mortgages, and finance companies stop making them. I’m unaware ot too many Americans buying houses with cash.

Jefferson, I would really appreciate it if you could email me your RTO paperwork you mentioned. I am learning a ton on this topic thanks to everyone for the info.

I just emailed them to you. Check your spam filter if you do not find them in your InBox.

To your continued success,


Gopher how much are the monthly HOA fees on the lot. Remember if you keep the land and only sell the home you will continue to pay the HOA fees. In addition selling only the home will make it of less value. Average sale prices of $70,000 includes the land with the home.

Can you elaborate on how the rent credit works in a way that “might” (ie: see your attorney) work to get around the Safe Act.