I was out to do my first Lonnie's deal but..

I was out to do my first Lonnie's deal but..

Homeowner · philadelphia, PA · Member since 2009 · 10 posts · 1 vote

(Hello, biggerpocketers) I got lost and very discouraged.

There are limited numbers of MHP in my area. I drove through all of them, and spoke with the most of owners and managers. One of the managers almost laughed at my $5k budget, and I was told the average price of the home was $30k in the park. It seemed impossible to find the deal in my budget. Another problem was, most of the parks had $500+ lot rent + water sewer and trash. They also required one month rent amount for security deposit. I was surprised at how expensive it was and owners were firm about the rent.
Weeks went by, I got calls from 2 parks telling me they had houses within my budget. Both houses were 12*65(?), 2/1, very old(70s), ugly, dirty, and saggy. On top of that, they were missing the most of the appliances. And one park owner told me that the house may need some modification to comply HUD code on MY expense. Otherwise when I sell the house, it would have to be removed from the park!
Now, this does not make sense to me. How can I sell an old 2/1 mobile home on top of $530 lot rent to someone where 2/1 apartment starts from $750? Do some people prefer to finance old mobile homes? How can I convince them? Or is the market in my area not acceptable to invest in?

I am sorry about the long and unorganized post.
Please, guide me to the right direction..

1Reply
21 views

Most Popular Reply

Real Estate Investor · Aurora, CO · Member since 2010 · 25 posts · 3 votes
16y

Hi Eric,

I understand your feelings of discouragement, but allow me to share a very recent success story with you and perhaps that will make you feel a little better.

I, like you, started talking with park managers and also got very discouraged. I had one park manager show me someting in my price range (also $5000) that he should have paid me to take off his hands.

I then realized that there are many parks out there (at least in my area here in Denver) that buy homes from residents, put a minimal amount of money and work into them and then turn around and finance them to buyers (often at very lengthy terms). So, in essence, I was competing with them.

I recently purchased a 3/2 that was FSBO for $8000. It was in good condition, just needed cleaning and replacement of blinds. I re-sold it to a family 2 days later for $14,900 on terms.

The lot rent for the park was $522 and the family that purchased the home had been renting an apartment for $900 a month, so they wanted to pay less than that. We were able to structure the note so that their payment was $860 a month, including the lot rent, and they will own it in 5 years. They are happy because they will own something and the home has storage sheds and a fenced yard (something their apartment did not have).

It is possible to find homes in your price range. You will have to "drive for dollars" as Lonnie suggests, so that you can buy directly from the owners. And, you will find people that are willing to pay at least the monthly rent that they are paying for their apartment, if not more, since they will own it.

Hang in there. It takes time, however, once you get the hang of it and know where to look, the deals will happen. We are working on our second purchase - a 2/1 for $5500. Also, a FSBO.

Good luck!

See this reply in the discussion

11 Replies

Jump to latestLatest
  • Real Estate Investor · Aurora, CO · Member since 2010 · 25 posts · 3 votes
    16y

    Hi Eric,

    I understand your feelings of discouragement, but allow me to share a very recent success story with you and perhaps that will make you feel a little better.

    I, like you, started talking with park managers and also got very discouraged. I had one park manager show me someting in my price range (also $5000) that he should have paid me to take off his hands.

    I then realized that there are many parks out there (at least in my area here in Denver) that buy homes from residents, put a minimal amount of money and work into them and then turn around and finance them to buyers (often at very lengthy terms). So, in essence, I was competing with them.

    I recently purchased a 3/2 that was FSBO for $8000. It was in good condition, just needed cleaning and replacement of blinds. I re-sold it to a family 2 days later for $14,900 on terms.

    The lot rent for the park was $522 and the family that purchased the home had been renting an apartment for $900 a month, so they wanted to pay less than that. We were able to structure the note so that their payment was $860 a month, including the lot rent, and they will own it in 5 years. They are happy because they will own something and the home has storage sheds and a fenced yard (something their apartment did not have).

    It is possible to find homes in your price range. You will have to "drive for dollars" as Lonnie suggests, so that you can buy directly from the owners. And, you will find people that are willing to pay at least the monthly rent that they are paying for their apartment, if not more, since they will own it.

    Hang in there. It takes time, however, once you get the hang of it and know where to look, the deals will happen. We are working on our second purchase - a 2/1 for $5500. Also, a FSBO.

    Good luck!

  • Homeowner · philadelphia, PA · Member since 2009 · 10 posts · 1 vote
    16y

    Donna, thanks for the kind words.
    Your success story feels much more real than the stories from books.. I guess I have to be more patient. I'll check out some FSBO signs tomorrow.
    and keep us updated about the 2/1 deal!
    Thanks

  • Real Estate Investor · Near Houston, TX · Member since 2010 · 93 posts · 12 votes
    16y

    Hi Eric!
    I am in a similar situation as you. I'm still looking for my first deal, but I only have $2000 to work with right now!
    I want to encourage you to keep trying. I am doing my best to not give up and keep going. From what others have posted, it seems the the first deal is the hardest to find, then the 2nd and later ones come much easier. So we will have to just keep looking til we find the 1st! We can do this!!!!
    Donna,
    I'm very excited to hear about your first deal. Sounds like you did a great job with that one!! Congratulations. We would love to hear any details you would care to share.

  • Real Estate Investor · Aurora, CO · Member since 2010 · 25 posts · 3 votes
    16y

    Thanks Marilyn!

    I happened to be driving through a family park and saw a FSBO sign in the window. I learned that the owner had just placed the sign in the window the previous day, so it was just a matter of being in the right place at the right time. She was asking for $10k and I offered her $8k, which she accepted. I got possession a week later. I had been advertising in Craigslist and had someone call me the day I got possession. It sounded perfect for them, so I had them come and take a look the next day and they loved it.

    I wish all of them were this easy, but I have a feeling that there was a lot of luck on my side with this one. I do, however, believe in the old adage, "the harder you work, the luckier you get".

    I wish you both the best of luck in landing that first deal. Once you do, you'll begin to build momentum and it will definitely get easier.

    Donna

  • Real Estate Investor · Near Houston, TX · Member since 2010 · 93 posts · 12 votes
    16y

    That's great, Donna! Amazing how fast you sold that one. Hope all the future ones go as smoothly.

    Eric,
    How are you feeling? Are you still discouraged? Let us hear from you.

  • San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    16y

    Sounds like you're doing all the right things, Eric. Honestly, it just takes time like any other business. I went through the same thing.

    Though it takes a lot of time to learn the market, build a network, and a lot of persistence, I think it's definitely worth it.

    Thanks for sharing, hang in there - we're all rooting for you! :D

  • Homeowner · philadelphia, PA · Member since 2009 · 10 posts · 1 vote
    16y

    Thx to the people here in BP. I feel better now knowing that others went through similarly difficult situation. I was rushing it because of my personality but I am going to take some time and wait for the deal. I'll prep myself with more reserve fund as well incase I run into nice 3/2 like Donna did.

  • Real Estate Investor · Near Houston, TX · Member since 2010 · 93 posts · 12 votes
    16y

    Hi Eric,
    Glad to hear you're hanging in there.
    Where I live there are also few parks. I live in a very small town.
    What I did was Google mobile home parks in my town and then click on More mobile home parks near (my town). It gave me all the parks all over Houston (I'm about 40 miles away) and the surrounding areas.
    Doing that I found a couple in my town I didn't know about and a whole world of parks in the Houston area.
    The past couple weeks I have been lazy about driving parks (it's hot! and my car AC is out, plus I have kids to drag along), but plan to get busy on that.
    I found on Mapquest that you can put in up to 25 locations and have it map out the shortest distance route for you, so I've got a route planned for a nearby town. If I find nothing there I plan to widen the search area and keep looking til I find something.
    I also have an ad coming out next week, but haven't had much success with the 3 or 4 ads I've placed so far. almost all of the responses I've received have had to be moved. My new ad states that I buy mobile homes that don't need to be moved. So hopefully, I'll get some better leads.

  • Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
    16y

    After you make that first deal - you will be sold on mobile homes as the BEST way to invest your money. With 12-15% notes on the homes you sell - you will soon be raking in the dough! Post your successes and lessons learned for others to learn from!

  • Real Estate Investor · Oxford, PA · Member since 2009 · 19 posts · 2 votes
    16y

    Eric,

    Hello. I'm in PA too. Born and raised in Philly but I'm in Chester County, PA now.

    I haven't done a Lonnie deal in quite a while but when I did I remember that it took me a bit of driving parks to find my deals.

    I did talk to park managers but I never really got a deal from one...I'm sure I would have eventually though if I stayed involved in mobile homes but I moved onto single family homes (now, I'm looking at mh's for my self-directed ira, tho.)

    Fsbo's were where it was at with me. Also, I don't know exactly where you are in Philly but you may have to drive a lil bit to find a great deal of parks. Perhaps? Again like I said I have no idea where you are and I'm not familiar with any Philly parks.

    I did my Lonnie deals in Chester County.

    Good luck tho. Keep at it and you'll do fine!

  • Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
    16y

    Donna:

    In your success story you did not mention the interest rate that you financed the MH for. With banks paying such low ball rates on your money it is better to have it in MH notes. Perhaps by sharing this amount more people would be motivated to work in this area.

    If you do business in Colo Spgs - my manager has a few small lots that need to be filled. If interested PM me and I can pass info on. Any home a Lonnie Dealer brings in - deals can be worked on free lot rent for a few months to get it set up, $1500 can be paid towards the cost of moving a home in. Lot rent would start when you have a Buyer. If you want her to collect the payment and send you a check - this can be done for a 5% monthly fee deducted from the MH payment collected.

Join the conversationCreate a free account to reply, vote on answers and follow this thread.