All Forum Posts by: John Fedro

Hi Stan,

Very good questions. I'll be happy to answer them below. If I misread any of the questions or don't answer them fully please don't hesitate to comment back.

1. The answer is "it depends". What is your end goal through real estate investing? Purchasing homes creatively for motivated Sellers will allow you to purchase and control mobile homes in parks and on private land with relatively little out-of-pocket. Ideally less than $5000 for either. Both of these types of homes have their pros and cons. Additionally, within both of these niches there are many things to watch out for with regards to your desired exit strategy. Personally, I suggest you aim for both if possible. Start with mobile homes inside pre-existing communities and then quickly include mobile homes attached to private land. Be aware of state limits concerning being licensed as a dealer. It may ideally be your goal to help all mobile home sellers, no matter what type of mobile home they have in and around your local area.

2. Mobile homes that need to be moved offer pros and cons of their own. You can likely purchase them for an even more conservative amount then we purchase mobile homes inside pre-existing communities. Additionally, working with local parks you may receive a move-in incentive when adding the home to a local park. Some parks will even pay for the entire move and set up of a mobile home if the home fits their requirements.

3. I have written a number of articles for bigger pockets with this exact question in mind. You can check out some of these articles here. http://www.biggerpockets.com/renewsblog/author/johnfedro/ with that said there are four areas where a mobile home investor may usually mess up. 1. Overpaying for the home. 2. Overpaying on repairs. 3. Leaving way too much money on the closing table when reselling. 4. Putting the wrong buyers in your home if selling with payments. However there are so so many other issues to watch out for with regards to the home, the park, your local market, sellers, buyers, financing laws, state regulations, etc. (Yikes... I'm making it sound pretty rough and bad here, the truth is mobile homes can be forgiving however you have to purchase them correctly for your market.)

4. When purchasing mobile homes within pre-existing parks, I aim to never move the mobile home out of that park. Additionally, I try to never sell a mobile home to a buyer I know will remove the home from the park. This is because the park manager will not be happy (in most cases) if a mobile home lead to the community.. therefore the park manager may not be happy with me. And I wnat to keep the park manager happy if possible. In short, we do look for very low-risk buyers to come in and purchased the mobile home as it sits currently in the community. In almost all cases the mobile home will not be removed from the park for many many many years to come.

I hope this all helps and makes sense. Please keep in mind that all of these words above are opinions based on years of experience. Other people may have ideas and objections just as valid as mine. If you have any additional questions or follow-up concerns never hesitate to reach back out message me personally.

Talk soon,
John Fedro

Hi Stan,

Glad you're taking action and finding local sellers to speak with and help. Almost all mobile home communities will not allow you to "sell rent", "sublease", or "rent". You will almost always have to sell the mobile home to your new tenant buyer when they moved in. With that said some mobile home parks around military bases are more prone to allow renting than most parks. 

I'm not sure that I understand your final question however with regards to your question about, "would you rather live in a mobile home in a pre-existing community or a mobile home attached to my own private land?" A mobile home attached to my own private land will give me more privacy, appreciation, tax benefits, etc as a homeowner that lived there. If you polled most mobile home buyers many of them would rather live on a mobile home attached to private land versus a mobile home inside of a park. I hope this answers that final question. If I misunderstood it please don't hesitate to ask again.

Talk soon,
John

Hi Stan,

Thanks for reaching out and asking this question. When I made this statement on the podcast I likely should've gone into more detail about these certain deals. Below I'd be happy to clarify just what I mean and where these deals can be found. Please let me know if this helps and makes sense.

In every area around the country, outside of Washington DC and Hawaii, you will be able to find mobile homes for sale for $2000, or that you can negotiate to $2000 to purchase. Some of these potential "deals" may be able to be resold quite easily for $20,000 or $30,000+ as-is, however some of these potential "deals" will not even be worth the $2000 paid for the home.

I think that most of us here will agree that purchasing a home for a few thousand dollars in selling it for 10 times this price is a great investment. However these "deals" are not the majority. We have to hear many "No's", some of them temporary, before closing the deals that fit our criteria (mentioned below).

Let's get started: As mobile home investors it is important that you talk to every local seller, park manager, dealer, park owner, repo man, investor, seller, realtor, etc. in your local area to let them know who you are, what you are looking for, and how you can help them too.

In short, it is my goal for newer mobile home investors to become very well familiarized with their local area within a week or two's time. It is for this reason you, Stan, will befriend and speak with every mobile home seller, park manager, etc in your county/parish/township and the surrounding counties as well. From this point you will have a better understanding of who currently is selling their mobile home, the current condition of their mobile home, and why they are selling.

Understand that many of these sellers will be asking whatever prices they feel is realistic for them based on a variety of factors. The important thing to note is that some sellers will need to sell within a few weeks or few days, and other sellers will not need to sell for months and months.

The deals I am talking about finding come from a combination of knowing every seller in the market and making offers to every seller with an aim to helping them solve their headache and moving on with their lives. We follow up, we stay persistent, and some we close right-away and others take a few weeks or months to come to fruition... if ever.

The important take away is that, from experience, and I say this humbly, that in every area there are sellers and homes to purchase for less than $5,000 for a good looking 2 or 3 bedroom MH. If you are not finding them then you are not looking hard enough, going to enough areas, or talking to enough people.

Please do not go out quickly and buy the first home you see, negotiate to half price, or before you fully understand your local market and the sellers/buyers yet. It is so easy to overpay or do a bad/skinny deal. Yikes... I hope this comment don't come off as me saying the sky is falling. However it should be noted that as investors we take risks and must make a healthy profit to stay in business.

You mention the word "flip" in the original comment as well. While I do fast-turn mobile homes I rarely sell for an all-cash payment arrangement. Many of the homes I sell are sold via monthly payments, rented, or with the help of an approved mortgage loan originator if attached to private land (however for this comment I realize we are talking about mobile homes inside parks).

I hope if nothing else that this comment thread has served as a "high bar" to set future goals/deals to. From California to New England it is my personal recommendation to purchase mobile homes under the following conditions. When you resell your mobile home via payments aim to make all your invested capital back in 10 months maximum, sell for 60 months minimum, and aim for a minimum cash flow of $300 monthly. If selling for cash aim to quickly 2X-4X your invested capital. 

There is so much else to say however I hope that this provides some logic behind my ambiguous statement of buying mobile homes at these prices.

I am very curious to hear what other people around the country may have to say in regards to your question as well. While I am helping a number of folks I am certain there must be other investors seeing similar and/or different numbers as well.

I hope this helps, Stan. If you have any follow-up questions never hesitate to comment back. I know there are a lot of folks on this website that are eager and happy to help provide newer folks with clarity and help avoid some pitfalls. Keep in touch.

Talk soon,
John Fedro

Hi Ron and Carol,

Good basic questions. The answers will vary depending who you talk to. 

The short answers to your questions are 1.) It depends and 2.) it depends. 

I see that you are located near Northern California. After doing a quick search I see that there are over 250 family mobile home parks within a 50-mile radius of your area. I bring this up because you have opportunities in your area to help buyers and sellers. Additionally you're inland so your lot rents will be reduced from the coast's absurdly high lot rents.

You mentioned "flipping" these homes? Many times mobile homes are great for passive cash flow and rentals, however in most areas finding cash buyers or bank approved buyers may prove difficult. With that said your area may have more cash buyers in the market that are willing to pay a higher price due to the area.  I bring this up to alert you that flipping mobile homes for $30,000+ paydays are unlikely. Certainly not impossible… But not typically as quick or easy as renting or selling via payments. 

You may also wish to consider investing in mobile homes inside mobile home parks and mobile homes located on their own private land that you will also be owning. Both of these types of properties obviously have their advantages and disadvantages. 

The closing procedure in your state with regards to mobile homes inside parks is relatively straightforward with all paperwork being signed by both buyers and sellers. Forms are then mailed to the state with the appropriate fees and ownership is transferred. Concerning mobile homes on real property, these are closed in escrow in a near identical procedure as any single family home. 

These were very quick answers however I hope this helped some and points you in the right direction. If you have any follow-up questions or concerns feel free to write back and we'll all be happy to contribute to helping you get clarity.

Talk soon,
John Fedro

Also, congratulations on the baby!! (I assume that's you in your profile pic.) A growing family is certainly great motivation to get excited, focused, and dead-serious about some type of RE investing. 

Talk soon,
John 

Hi all,

In an attempt to have a little fun answering these questions Im going to answer them each with one or two words. The reason for this is because in addition to these questions you, Amanda, will have so many follow-up and additional questions moving forward if/when you decide to pull the trigger and invest in MHs. (Which is a very good idea when you understand what you are buying, where you're buying it, your local market, and your exit strategy.) Please see my answers below in bold. 

Buying up decent mobile homes??? Depends. Good idea bad idea ? Depends. Only bad I can think of is perhaps the type of people willing to live in mobile homes??? That is a serious problem sometimes if you fill the home with the wrong people and fail to perform proper due diligence screening them. You can also overpay for a home and it will take over 12+ months to make all your money back. You can over-improve the home and have the same problem of making your money back too slowly to continue moving forward helping other sellers/buyers. You may leave thousands of dollars on the table when you resell and not make as much profit as possible. You may buy a lemon. Or like Bill mentions, you may buy in a park that is not conducive to mh investing. The list goes one. Well, this answer was certainly longer than 1 word.  I was going to do a veteran discount in hopes of attracting older people or military because I am so close to a sub base? Some parks near military bases do allow renting versus selling day #1, so you have this option if you wish depending on the park. Does anyone have any success with mobile homes?? Yes, many of us. However for every happy and "successful" Mh investor, there are likely 1-3 jaded investors (my opinion only) that have been burned or do not like Mh investing due to mistakes made along the way. I hope this makes sense. Any help would be amazing .... I also have my real estate license so id be saving on commission also as a WIN. Will your exit strategy be to sell these homes all-cash? Do you plan on making repairs if needed?

I hope these brief answers helped some. Any follow-up questions don't hesitate to ask us. We're all here to help each other. In short, there are a number of hurdles to be aware of moving however if you are dedicated and serious then you can very likely create value with local MHs, sellers, and buyers in your area. 

Keep in touch,
John Fedro

Hi Alphonso,

Great job pulling the trigger and reaching out to so many local park owners. Really well done. I like that you took the straightforward approach just started searching out parks for sale and calling away. Keep up the great daily effort.

Seven lots will certainly not make you wealthy however it can be a nice little income producer when it is all set up and running right. Seven lots also does not give you room for a park manager however if it is nearby it should not be difficult to manage, or you can hire out a property management company.

Is $100 and appropriate lot rent for this area? Would you consider selling the mobile home with monthly payments and getting only owner occupants into the park versus continuing to rent the mobile homes? Repairs and other deferred maintenance is also a question that needs to be answered? You didn't mention the utilities, are these well and septic tank, city water and sewer, or other?

With only seven lots and two thirds of an acre I also would asked the question if this is a true permitted mobile home park, or simply a small piece of land the owner has added more and more mobile homes to over time. If this land is grandfathered in like this then you may not be able to replace a mobile home if you remove one. However this may or may not be the case and will be solved with a quick call to the zoning department.

Some people may tell you that seven lots is not worth your time. In reality every deal is different and every investor is different. Because this is your first park this might be the perfect and safe opportunity for you to get in and establish yourself in this niche.

There is definitely much due diligence to proceed with moving forward. However once you know the net operating income the park is currently bringing in, then you can formulate an offer to purchase this park from the seller. It sounds like the seller is fairly motivated. If this is the case I'm curious why. A hunch would be because the park isn't generating any revenue, but I certainly could be wrong.

This Park could absolutely be a good deal for the right price and terms. Due to the condition of the park and the sellers motivation it sounds like you are in contol to make an owner financed offer that allows you to recoup your investment back quickly and allow the park and selling the mobile homes to pay for itself.

I hope this has been somewhat helpful for pointing you in the direction to gather more facts and move forward at least making an offer. As a mentor of mine said, "Price cures most worries". If you can get the park for the right price and terms you will be profitable and in a save position. You will definitely have follow up questions and thoughts. Don't hesitate to comment back. We're all here to help one another.

There are a lot of other active mobile home park investors on this website with valuable experience. @Jefferson LillyIs a great source of information as well and I be curious to hear his thoughts.

Talk soon and keep us up-to-date with your progress moving forward,
John Fedro 

Hi Alphonso,

Great job pulling the trigger and reaching out to so many local park owners. Really well done. I like that you took the straightforward approach just started searching out parks for sale and calling away. Keep up the great daily effort.

Seven lots will certainly not make you wealthy however it can be a nice little income producer when it is all set up and running right. Seven lots also does not give you room for a park manager however if it is nearby it should not be difficult to manage, or you can hire out a property management company.

Is $100 and appropriate lot rent for this area? Would you consider selling the mobile home with monthly payments and getting only owner occupants into the park versus continuing to rent the mobile homes? Repairs and other deferred maintenance is also a question that needs to be answered? You didn't mention the utilities, are these well and septic tank, city water and sewer, or other?

With only seven lots and two thirds of an acre I also would asked the question if this is a true permitted mobile home park, or simply a small piece of land the owner has added more and more mobile homes to over time. If this land is grandfathered in like this then you may not be able to replace a mobile home if you remove one. However this may or may not be the case and will be solved with a quick call to the zoning department.

Some people may tell you that seven lots is not worth your time. In reality every deal is different and every investor is different. Because this is your first park this might be the perfect and safe opportunity for you to get in and establish yourself in this niche.

There is definitely much due diligence to proceed with moving forward. However once you know the net operating income the park is currently bringing in, then you can formulate an offer to purchase this park from the seller. It sounds like the seller is fairly motivated. If this is the case I'm curious why. A hunch would be because the park isn't generating any revenue, but I certainly could be wrong.

This Park could absolutely be a good deal for the right price and terms. Due to the condition of the park and the sellers motivation it sounds like you are in contol to make an owner financed offer that allows you to recoup your investment back quickly and allow the park and selling the mobile homes to pay for itself. 

I hope this has been somewhat helpful for pointing you in the direction to gather more facts and move forward at least making an offer. As a mentor of mine said, "Price cures most worries". If you can get the park for the right price and terms you will be profitable and in a save position. You will definately have follow up questions and thoughts. Don't hesitate to comment back. We're all here to help one another. 

There are a lot of other active mobile home park investors on this website with valuable experience. @Jefferson LillyIs a great source of information as well and I be curious to hear his thoughts.

Talk soon and keep us up-to-date with your progress moving forward,
John Fedro

Hi all,

First off, I regret to hear about your recent layoff. You are in good company on this website because most of us are here pursuing our own side businesses so that we will not have to rely on the income of a traditional job. Additionally, it is good to hear that you are not being a victim or blaming anyone. This layoff has happened and now you simply must move forward in the best safest way possible.

With all that said I might be the only person here who does not think you should jump into this "free home" deal. I say this to you because of your inexperience in this niche and also the "red flags" that you mentioned in your original comment. You are in a vulnerable position at the moment and I do not think it is wise to make decisions based on emotion versus logic. In this niche it is so important to know your local market, know what buyers will pay, know how many senior buyers there are, and know your exit strategy before moving forward. Based on your original posting it seems like you are taking a shot-in-the-dark because of the "free" home and lot rent. *This free home and lot rent is actually pretty common, so don't worry about missing out on this opportunity because you didn't act quick enough. There will be others I promise, likely in family parks and/or in better shape.   

Without any income coming into you weekly you are taking a gamble that this free mobile home will be quick to repair, attractive to buyers, and lucrative enough to generate a nice payday or monthly income when rented or sold. Because the mobile home is in a senior community it will be a good idea to know what else is for sale in the same community and similar communities locally. When you repair and resell your investment mobile home you may be competing against other sellers depending on how they are selling and the condition of their homes. The snowbirds will be returning later this year so you will have a chance to sell to these folks when they get in. 

If you do decide to move forward with your due diligence than I highly suggest you have at least two mobile home experienced handyman walk through the properties and give you an estimate on the repair work needed. In senior communities many purchasers will want the homes to be in move-in ready shape, as opposed to handyman specials.

With all of this said if the homes are good sizes (ideally 14 feet wide and good sized bedrooms) and do not need more than a few thousand dollars in work, then they may be good opportunities to purchase and resell. It is quite important that you will have this 4 to 6 months free lot rent as you describe in your original comment. This way you are not bleeding the lot rent monthly in addition to making repairs and marketing.

Everyone here respects your ambition and determination to move forward in this niche rain or shine. This "free" mobile home may be a very lucrative opportunity, however do not let the word free distract you from the goal of a real estate investor. In your area there are likely other sellers and/or parks that are confused and willing to sell their nice mobile homes for a free or next to free price. These opportunities may be more lucrative and easier to pursue than the "free" mobile home you described above. Keep in mind that because of your limited budget if you do close on this free home you will likely be limited to this one deal or two until you resell them and can move on to your next opportunity.

In short my advice is only that of one person. Everyone must do what is best for their own interest as they see fit. I highly suggest you look for new employment, start generating an income, then look for slightly newer mobile homes that need less work in family communities. It is far better to wait a little while to start and follow the path of least resistance. I hope this helps and makes sense. If you have any follow-up questions or concerns don't hesitate to reach back out. 

Talk soon,
John Fedro

Hi Cristian,

Thanks for posting. Please see my thoughts below in bold. Your original comments are in non-bold. 

Hi I got really inspired by John Fedro's Videos and wanted to get into Mobile Home Investing. So Recently i started posting ads and searching for sellers and buyers and i found multiple buyers and finally found a good deal on a home. Congratulations for having the ambition to take immediate action aiming to help local buyers and sellers. This takes guts in and of itself. 

The Problem is i realized i don't have the money to afford the amount the seller wants and can't get approved for a loan for the price. This hopefully was relaized before you ever got started advertising.  

So My Question is Can you Wholesale a mobile home with purchase agreement and assignment like general homes? Similiar to SFRs, but not the same. Mhs in parks are tough to wholesale for a variety of reasons. When mobile homes are in parks there is little way to cloud a mobile home title until the sale. This means that when you sign a purchase and sale agreement with a seller, they can go around you the same day (or any day until sold) to sell to another buyer with more money than you. There is no loyalty to you if the buyer wishes to cut you out of the deal. 

This brings us to the next point. Will the seller know you are assigning to another person and making a profit? If they do then you can keep everything open and honest and you let all parties know your profit. Plus, you'll be able to show the home without worry and with the help of the seller. You'll likely have the buyer sign your assingment of contract and pay you your assignment fee at closing. In my opinion it is best to close at an attorney's office to help fasilitate the transaction. 

A closing attorney will also help incase the sellers and buyers do not know of each other, or don't know you're assigning the contract. In these cases you can perform a sort of double closing; your buyer will pay you for the home, you'll then use your buyer's money to pay off the seller. The title/ownership is then passed to your buyer. In either case you are not on the chain of title in these cases.    

And also if i am selling to a Buyer that would need a loan how would the process be for that? You will be putting the deal together and closing at your attorney's office. Purchase contract signed with seller, Assignment agreement signed with buyer, buyer applies for loan, close at attorney's office. You will be listed on the HUD-1 clsing document and all parties know your profit.  

and If So how would i go about getting or creating the contracts? For what you are looking to do a Mobile Home purchase contract and traditional Assignment contract should be enough to put this deal together. Again, while wholesaling MHs in parks I suggest you use a closing attorney or escrow office, they are a 3rd party agency that people trust. 

You also have the option of taking an Option on this home, then transferring the option for a fee. This is a similiar method and the buyer will know your Option assignment fee. 

One thing not mentioned is that Ca asks that you have your Dealer's license if you plan to buy/sell a Mh in your state for a profit. While you are not owning the home, I still wanted to bring it up as it may have been a concern of yours.  

The seller wanted all cash because he needs the money to move and he owns the home free and clear. All sellers say they want and need all-cash. Some really do, but most do not.

I live in Southern California. Hopefully your assignment fees will be $3,000+ to make all this effort worth while.

There are multiple ways wholesaling a Mh in a park can look depending on your relationship with the seller, the seller's motivation, and if the seller is even still locally in town. Not to mention the demenior of the park manager and if they are goign throuhg a bank for financing.  I am very curious to hear what other Mh investors have to say on the topic.

Hope this helps some and makes sense,
John