All Forum Posts by: Ken Rishel

My firm, The Rishel Group, is not accepting any new clients. We have however helped over 500 community groups form their own finance companies and we have had thousands of customers seeking legal ways to do business. We also had our own chattel finance company operating in a number of states with a high loan volume of about a half a billion dollars. I and Tim Williams, of 21st Mortgage, formed a Dodd-Frank Task Force to deal with all the new regulations and the CFPB which every other major manufactured home chattel lender joined and helped to fund.

Not all attorneys are experienced at regulatory law or even qualified to address these issues even though some of them act like they are. While I'm not an attorney, my firm spent considerable money retaining and using several top Washington D.C. law firms when the SAFE Act was introduced and to deal with all the changes in chattel lending regulations that resulted from that change.

As another poster suggested, you should go back and read what my people and others have posted here on the subject. You are 100% wrong in what you are suggesting as a method of finance conveyance. While I cannot predict the likelihood of your getting caught, I can predict what will happen if you are caught and it won't be pleasant.

I was going to just ignore this thread until my name was used. We are unavailable to help you, but there are at least 10-12 highly qualified law firms who can. Seek them out.

Jermaine Dabney

replied 3 days ago

My question is can I act as the mortgage company for buyers that don’t have the full amount, but approved by the park

That is a different question and the answer is NO unless you are licensed by the State of Illinois to make chattel loans on manufactured homes.

As the Managing Partner of a national consulting company who helped hundreds of Lonnie Dealers change their operations to a legal operation, listen to Frank and the others. This is no longer an inexpensive entry to the manufactured housing industry. Anyone needing referrals to qualified laws firms to help with the legalities may contact us if you are financially able to handle the start up costs and legal fees and we will give you a list of firms we know to be qualified and experienced.

For the Record: Due to my age, we have changed our operation and limited our areas of focus. We are no longer working with new customers on finance issues other than mathematically modeled credit matrixes for manufactured housing chattel lending and in the deployment of our and others money as investors in manufactured housing loans to large captive or related finance companies.

When I was developing and buying communities we always (one exception) laid our own glass cable and acquired a T-1 connection. That gave us a major tax write-off and a long-term income stream by providing telephone, cable, and internet that was immune to rent control regulators.

Being in a remote area is a plus that means little or no competition but may mean a T-1 is not a viable option which means a commercial satellite connection.

Mike B. from Chicago, IL

replied about 21 hours ago

Hi Carrie - in BP Podcast #339, the guest mentioned that the country doesn't allow new mobile home parks to be built anymore - meaning, in order to invest in a park, you have to purchase one that's already there.

Mike - This is so wrong. First of all, that would be a Fair Housing lawsuit waiting to happen - if HUD didn't get involved first. Second, while developing new parks has become less common than it was when I developed them in the 1970s-80s, I am personally aware of twenty large developments underway right now, one of which is in Illinois and a very large one in Florida by a Chicago based MH operator.

BP can be a very good source of information and, unfortunately a constant source of erroneous information as well.

This was posted in response to someone asking about investing in homes and/or parks in another area of BP:

Investing in land lease communities and/or investing in the homes themselves is very complicated and requires a great deal of knowledge to do successfully. While many, including myself, have been very successful at both, far more people who jumped in without the knowledge have ended up losing a great deal of money.

Part of the problem is very much like the parable of blind men describing the elephant. Geography and economy play a huge part in what works and what does not. Interestingly, different successful models can exist at the same time in the same area under certain circumstances which makes it even more confusing to the novice. There are reasons for this, but it takes considerable knowledge to understand why.

Here are three suggestions:

One, go to the threads on BP that deal specifically with manufactured housing. https://www.biggerpockets.com/... and read not only the current posts but also the older posts as well. Bear in mind that many of the posters have faulty opinions themselves because they lack experience and knowledge, but that a few experienced folk also post there from time to time to try to help.

Visit the RV/MH Hall of Fame (Elkhart, Indiana) and spend a day or more in their library reading from their extensive works of now defunct publications and older books. Subscribe to the last remaining print publication MH Insider for current information. https://www.mhvillage.com/pro/... Get on George Allen's email list for his blog and buy his books on land/lease communities. https://www.educatemhc.com Attend the Louisville Manufactured Housing Show in Louisville, Kentucky in January. http://thelouisvilleshow.com

If you are still interested in getting involved, find a partner who is willing to teach you in return for you investing with them. Be careful however to find someone solid and reputable as there are many who might take advantage of you. This is how I started in the business in 1975, and how many, many other very successful operators of today did it as well.

Investing in land lease communities and/or investing in the homes themselves is very complicated and requires a great deal of knowledge to do successfully. While many, including myself, have been very successful at both, far more people who jumped in without the knowledge have ended up losing a great deal of money.

Part of the problem is very much like the parable of blind men describing the elephant. Geography and economy play a huge part in what works and what does not. Interestingly, different successful models can exist at the same time in the same area under certain circumstances which makes it even more confusing to the novice. There are reasons for this, but it takes considerable knowledge to understand why.

Here are three suggestions:

One, go to the threads on BP that deal specifically with manufactured housing. https://www.biggerpockets.com/... and read not only the current posts but also the older posts as well. Bear in mind that many of the posters have faulty opinions themselves because they lack experience and knowledge, but that a few experienced folk also post there from time to time to try to help.

Visit the RV/MH Hall of Fame (Elkhart, Indiana) and spend a day or more in their library reading from their extensive works of now defunct publications and older books. Subscribe to the last remaining print publication MH Insider for current information. https://www.mhvillage.com/pro/... Get on George Allen's email list for his blog and buy his books on land/lease communities. https://www.educatemhc.com Attend the Louisville Manufactured Housing Show in Louisville, Kentucky in January. http://thelouisvilleshow.com

If you are still interested in getting involved, find a partner who is willing to teach you in return for you investing with them. Be careful however to find someone solid and reputable as there are many who might take advantage of you. This is how I started in the business in 1975, and how many, many other very successful operators of today did it as well.

Finally, this is not an easy business, but it has been a very lucrative one for people who are smart and willing to work very hard at learning it and working at it. Many of us have become very affluent who started with very little capital and few other industries have offered this kind of shot at the American Dream.

It is pretty much bad news.

Most chattel lenders have year of manufacture limits which varies somewhat from lender to lender, and all chattel lenders have minimum amounts they will lend because changes in laws, rules, and regulations limit interest rates so that any loan less than 20,000 is pretty much more costly to service that the maximum interest rate they are allowed to charge will yield. As a result, most manufactured housing land-lease communities that finance what they sell have their own related/captive finance company to handle the purchase financing. A very few finance operations will finance lesser homes for community operators on homes less that 20K but will "haircut" the loan proceeds to the community operator in order to recover the costs of originating and servicing the loan.

Community operators that have homes in their community worth less than 20K often run their communities like a slum which means homes will not go up in value. Only certain operators have strategies and plans to actually improve the community while using older homes to do it, and they pretty much want to control the sale and perhaps the financing.

There are some folks offering some really scam opportunities often offering lease to own or lease option programs that are both illegal in many states and in many cases, they have no clear title to what they are selling. Thousands of buyers have been scammed out of their money in the last several years.

All in all, what you are hoping for is a very bad idea.

A local bank would seem to be the best bet for this situation.

 Patrick,

With all due respect you should read the hundreds of threads that have already dealt with this in great detail.

Do you have (or are you) a licensed MLO? Do you have state licensed lending company that is compliant with all the state and federal laws that a lender is required to comply with? 

That is the first step, and depending on the state, it may take you 90 days to over a year just to be legal when making loans.

All of that said, many, many community owners have their own related or captive finance operations. Why? Because, if you know what you are doing, chattel lending is very profitable. That said, many banks and credit unions have lost a lot of money trying to make these loans. Their regulators hate these types of loans, and often penalize banks and credit unions for doing them. Why? Because they normally jump in without knowing how to underwrite, service, and collect these loans, and they lose buckets of money.

The market for selling legal and compliant loans is pretty small. There is no regular secondary market, and the most prominent buyers are already making this type of loan themselves. Most operators choose to use the loans as collateral and borrow against them instead.

Your question as to return is too broad and to unrealistic to give you the answer on returns you are looking for. What I can tell you is that a properly run lending operation is normally able to generate a 5% spread between the cost of funds and cost of operation on an average.

Do yourself a favor. Go back and read the very extensive already existing threads on this subject in the Mobile Homes & Mobile Home Park Investing threads. Doing so would help you to better understand part of what you need to know to ask more on track questions.