Mobile Home Investors Profit

[Casey Cash]

Question?

I have been investing in mobiles over the past 6 months and doing fairly well with 4 homes. Several friends, family members, people from word of mouth and been watching my progress and now would like to invest to make some sort of profit back. I am giving offers to invest weekly! I just started in the business and built a team of handyman where I do the work as well. I need to know how much profit would I give an investor back? Would it be on the initial sell on the home or the money they invested? Also they would all be SILENT PARTNERS. I am doing all the leg work of finding the homes and repairs with my men. Please help! Thanks Guys!

[Edward B.]

@Casey Cash, you can structure the deal any way you want. They can lend you the money or you can have them as equity partners where they share in any profit you make. The appeal of equity partners is that they can make a much better return, but they can also lose their money. Depending on how you set it up, you may not have any money at risk. Personally, I would never allow someone who invested with me to lose money if I can help it. I would eat the loss regardless so I don't like to give up further upside since they really aren't taking on the risk of loss. So I have always set up people who invest with me as a loan and secure it with the property. This puts them in a much better position because their investment is secured (they get the property if you default) and it clearly outlines how much they can expect to make (points and interest rate). It is obviously more complicated than that but that is the gist of it.

To specifically answer your question, depending on the lender and the deal, I have paid anywhere from 8% to 10% and 2 pts to my investors. Any more than that and I could probably find cheaper money elsewhere. Most people are thrilled to get that kind of return secured by real estate. 

If you are just investing in MHs and not MHs attached to land that would change the dynamic somewhat since you are talking personal property vice real property but the premise is the same. Their investment is still secured, but it would be more like lending on a car instead of real estate which is riskier and should command a higher return to the investor.