I hope you all are doing well and getting off to a great 2010. I posted this originally at a creative financing site and then copied and pasted to CRE and I wanted to send it over here too.
I have already done quite a few deals this way in the past few months and I expect to do 5-10 more before the deadline. I wanted to see if anyone is doing this OR see if anyone can profit from it. Good luck!
I have been doing some deals in the last few months with great success. It involves mobile homes on land and I don’t hear other investors talking about this strategy. I wanted to share it, break it down, make it better- perhaps, and hopefully by doing so others here can profit from it.
First, I have been investing in mobile homes on land now for about four years. Actually, 90% of the deals I have done have been mobiles. Back when FHA loans were still somewhat easy to qualify for we were selling homes to our retail buyers with the program. With gift funds through Ameridream(etc), lower qualifying scores, and affordable rates we had a decent system going.
It’s no secret mortgages are much harder to qualify for now. But, IMHO, I think qualifying mobile homes on land is EVEN tougher. Banks are moving far away from these things for many different reasons(different disscusion).
So, for the last year I have been learning and practicing different techniques like lease/options, sub2, wraps, etc. I was able to pick up some really nice deals Subject to the mortgage with nothing down with NO competition. I am still talking about mobile homes on land.
After a direct mailing campaign of STRICTLY mobiles I was flooded with sellers who were desperate to sell. I am talking about homes on the market for 1,2, or 3 years with NO activity. I mean NICE homes. These homes typically were selling for $100-120k two years ago in my market and are now listed around $80-100k. Listed right around payoff amount.
Obviously as an investor we could NEVER buy these properties and make money on them.
With this IRS credit currently in place I have been selling a few of my rental land/home properties on wraps. I am seeeing a TON of interested buyers for seller financed deals! Not to long ago my mobile home broker was telling me has had 700+ credit score applicants denied for mobile home loans because of varying reasons. So, there are GOOD potential buyers out there.
The technique I have been using with success has been to wholesale or “wholetail” these high priced deals. I am contracting with seller to purchase their property. Then finding qualified first-time buyer with a few thousand dollars and assigning them my contract for $8-10K. The IRS credit is pretty much my fee for helping them buy the house the couldn’t qualify for.
All parties have been extremly happy.
By “qualified buyer” from above I mean I am still actually doing credit, reference, employment check. Depending on the preference of the seller, I am actually presenting my potential buyer’s information to them and getting their approval before we close with title company.
That is a basic outline of the process I am using. I tried to keep it as basic as possible. So, is anyone doing anything similar to this? Do you see a way to improve upon it?
I have been meaning to share this and get some feedback. Any constructive criticism would be appreciated. I hope some of you are able to profit off of this!