Subscribing to the traditional Lonnie model of buying a $7K home in someone else’s park (NOT moving it to a new park), then selling it for $14K the same day. Supposing no work is needed to fix up. Taking a $2K deposit, and carrying the balance for 5 yrs at 12% still yields a fabulous 75% annual yield after netting out lot rents. If I stick to age restricted communities, I find that homes are well kept if they come back to me. Am I missing something? Or is this a sound business model?
Sounds great except for the SAFE ACT and other new regulations. It’s unfortunate they are making this difficult. It was a great way for new investors to get started, Great for park owners, and people who otherwise can’t own anything else.
You need to watch the rules and regulations on lending.There are also some rules on interest rates you need to make sure your in line with. Every state had ‘Usury’ rates. The rates differ based on asset class, if your regestered etc…
I am licensed with state dept of banking and NMLS for Safe Act purposes. Usury is among the various things I am complying with.
Then carry on, my friend, wish you would come to my park and fill it up :)I think it’s a great deal, it’s just the Safe Act that keeps us away. I have no idea what it would take to be Safe Act licensed but I’m sure it’s more than I care to do.
No one’s mentioned that this model traps the investor with un-rentable/sellable inventory when the park manager/new owner decides to lock out investors with no notice. With the corporatization of parks, new owners don’t want to give away profit to investors. As I discovered here around Atlanta. Sun etc told the park managers no investors! This is just a business risk for the Lonnie model. Getting stuck with a home that you owe lot rent on, but can’t fill with either a renter or buyer because the office has been told don’t approve any occupant from an investor owned home.I moved to a land-home business model. IE buy double wides on their own land. I don;'t rent (too much work) I rent to own then seller finance (Dodd Frank compliant). 25% - 30% cap rate here in the SE where I can buy doublewiedes on their own land for $18k-30k with varying fix up, $825/mo rent - to $900 recently. Demand for rent to own and seller financing is very high and applicant quality is decent.
That door swings both ways. I had about 60 ‘lonnie deals’ in a park here in Colorado. They told me the same thing. So when one comes back I give them a choice, they can buy it form me, or I will pull it to one of my parks. The park would rather have the filled lot with my old home than find another one to pull in.Many of these home the park gave to me 10 years ago, I bonded for title and sold them. So while I might not have the payments any longer they are paying a pretty big chunk for the homes as they return to me.
Don’t you also need to have a mobile home dealer’s license from your State if you buy and sell mobile homes?