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
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???