All Forum Posts by: Steve M.

Follow up to my previous post about this:

I began looking at specifics in MO regarding the SAFE act and mobile homes. The biggest disparity between MO statutes and the Fed's is where MH's fall by definition.

In MO, MH's have always been and continue to be a "Motor Vehicle" by definition under MORevS 365.020-Motor Vehicle Time Sales. The only way that status changes is by a legally filed process called "Affixation". This statute section references "as defined in section 700.010, excluding...requirements of subsections 1 to 3 of section 700.111, as applicable..." Section 700.111 is the part that talks about affixation, which is basically changing the MH to 'Real' property by permanently affixing it to an actual foundation. It then no longer has the nice Green Motor vehicle title after that. At any time you can perform "Severance" of the trailer which simply puts it back to MV status and you get a new title for it again.

So, the real issue here is whether MO's or Fed's takes precedence as to whether seller-financing MH's falls under the licensing or originator regulations in each state. I'm sure there will be more clarification on it in the next couple of years when issues arise in the courts and professional registration boards.

Now, I'm not an attorney, so I'm not giving anybody legal advice here, just doing my own research and passing on what I'm reading.

If you keep the MH's in MO as Motor Vehicles with a Green Title, then as I read the statutes, if you sell more than 4 MH's you are required to get a MH Dealer's license (MO Dept of rev Rules state 6). You can sell those O/F all day long once you've got that so long as you follow the requirements of Chapter 365-Motor Vehicle Time Sales. It's basically treated as a Retail Installment Contract.

My bet, and this is just a very big hunch, is that if you play within the MH Dealer rules and keep the MH's as MV's, you will most likely be ok. My other suspicion is that there may be some more standards written into the laws/regs about where the MH's are located, i.e. how much land does it sit on, is it located inside a MHP, etc.

If you are buying MH's that are affixed as 'Real Property' with the recording of docs at County & MO DOR and you are re-selling those, just beware. As Bill stated earlier, better to err on the side of using a licensed loan originator and working in the $300-500 origination fee to get it right. Just do like we all do and blame everything on Congress when your buyers and sellers squawk at it.
:mrgreen:

Bill stated that a MH, per the SAFE act, is covered regardless of whether it's Real or Personal property and regardless of where it is located. I agree with this position. However, my opinion may differ somewhat in that States that already have licensing and regulations pertaining to MH's specifically will take precedence in defining those type's of residence's and investing within those respective states. Best bet: SCHEDULE a meeting with your attorney pronto if you haven't already to get your game plan in place.

Yeah John, thanks for chiming in on my questions. My gut tends to agree with you on all points and yes, an answer may be as simple as what the park requires if it's not mine personally.

I've never heard of your option 3. Could you explain that a little more for me?

Thanks.

Scott, thanks for the reply.

So, if no value on that income, then there's really no value except the land/lots he owns including the lot rents you could pull from the 9 he owns the land on. I guess I can see where expenses would be higher on older trailers, but I'm not really following your value method.

I think I may have to split this out into different deals really to get the most accurate value.

The two "parks" he owns with mobiles on them should pull $90-100 /lot for rent. Let's just use $100 for easy math. That's $900/month, $10,800/yr. Taxes on these are $420 per year. Water & Trash run him about $425/month $5100/yr. These are both inside city limits and don't have their own streets and are all on city water/sewer so there isn't any repairs for those types of things, just the drain lines going to the sewer.

So, do I use the 2% rule to figure value? That would be $45k for just the land/parks. Then just figure individual values for each trailer? I am just guesstimating an avg of $2k for each, which would be $42k roughly.

This would give a total purchase of $87k. He owes $80k.

Still crunching numbers.

**Note**: He sent me a rental listing and the taxes for just the 2 parks is $420/yr. Originally I had said $800, but that was including all the pers property taxes on the other trailers he owns, but rents the lots.

Marc, I know this is a fairly old thread, but I'm wondering on the titles do you keep those or just put you on as security interest with the state? I recently had a seller tell me he's sold a couple as "contract for title" (like a contract for deed) with owner-financing so he's not actually transferring title until they pay it off. I'm in MO if that matters, but do you have any thoughts on that.

This is a deal I'm looking at. He also collects the lot rent and pays the park, which I kind of agree with you on that point. Why do that? I guess it's more because he's renting most of his, not selling. He actually owns two smaller parks himself (3 & 6 units), so on those that's just part of their total rent.

My biggest question is who keeps the title? My concern would be I don't want to have to chase them down for it or go to the state if they default or just walk away.

Also, is repossessing an O/F trailer worse or better in any ways than the eviction process?

TIA for any advice.

Hoorah Stinson! I agree whole-heartedly with everything except where you say "Locating cash buyers via the internet is relatively simple...". The only caveat I would add to this is it can depend on your individual market. A newbie like myself, I am starting more micro in my area of focus to learn the business and I, as a newbie, don't have the same network built as you. I think finding more cash buyers easily comes with time and building those relationships with investors and every once in awhile an owner-occupant buyer.

My specific market has lots of property opportunities, but not as many "cash" buyers. Most only have $1500-3k to start with. I have made some good initial relationships with a couple of investors, which is where I'm focusing.

You're very welcome Jacquelyn. Good luck wholesaling and investing!

Whoa Vena. That seems a little unethical of the listing agents and I believe I might have a few unsavory comments for them (after the deal closes of course. :roll: )

I agree with Shanequa on this and to take it even further, what everyone is talking about is having multiple exit strategies.

An investor who is going to buy and hold real estate is looking for a better annual return on their initial investment than what they could get in a CD, stock market, IRA, etc. So for them, I think it's first about that and what they are going to make as an ROI over 3, 5 or 10+ years.

However, that same investor may get bored with those returns (I use that statement facetiously) or just simply sees an even better return somewhere else, so the EQUITY you have either given them or they have built over that period now becomes their best friend in their own exit strategy.

I use a spreadsheet that I got off of this website. [http://realestate.about.com/od/knowthemath/tp/financial_calcu.htm]

It gives some good analysis percents, values, etc so you can be thorough when it comes to wholesaling potential rentals. It's nice when other investors pass on tools that they use themselves. :cool:

Talk to a KCMO attorney. I know a really good one who has done many of his own real estate deals.

This is the best way for you to protect yourself, your interests, the property and the sellers. The only reason I say this is because from my research, any "boilerplate" contracts out there just don't cut it. They don't take into account your area's specific state, county or local laws and real estate regulations.

You can try somebody else's, but I think it's worth it to spend $300-500 on a good one tailored to your specific niche. Just my penny thoughts.

PM me if you want the attorney's info.