Originally posted by Jason Robinett:
Looks like you're well on your way. Curious, how much cash did you start out with?
I just finished my first Lonnie Deal and came out OK. It was a 2/2 double wide in a 55+ park. Bought it for $4,750 and sunk another $750 into it with carpets, carpet cleaning and some paint, etc. Total invested $5500. (Looking back I could have got it for cheaper). I bought it August 16 and had it under contract August 23 contingent on park approval. Sold August 26 for $6,900, $500 down, $175 month, 48 months. Interest rate is 14%.
Like you said on your first deal, the amount I learned from this was priceless and I came out with a 28% ROI. Not great, but not bad. I priced it low because the lot rent was $775 per month (really nice 55+ park) and I didn't want to pay it.
If I were to do it again, I'd buy for less and hire someone to clean and install the carpet. I now know the cost and labor involved so it'll be easy to factor into my offer.
It'll take me a bit now to gather enough money for my next lonnie deal. I'm considereing borrowing some from my brother inlaw at a low interest rate. Time to be creative!
You've got more heart then I do jumping in to your first deal with $750/mnth lot rent!! Congrats on your first deal and an even bigger congrats on unloading that thing before lot rent came due! :)
The 1st home I did was about $2500 out of pocket all said and done then the second one was about $2k. Total out of pocket for both was $4500 - $500 down payment on the first one. Leaving a 4k hole in my pocket. Luckily I sold the second one for 4k cash which gave me working capital to take on a couple more. Bought the next one for $500 and sold it as is for $3500 cash. The most I've ever been out of pocket I think was 6k when I was working on 3 homes at once.
I try to keep my cost around 2k so I can get more deals done and recoup my money faster.
As far as creative financing goes there are a few options for you.
a) Sell your note to someone like Marc Faulkner (he's here on BP). They pay you upfront for the rights to your note. Payments would then go to him and you can move on to your second deal and forget all about the first one.
b) Borrow money from relatives, friends, or colleagues who are interested in making 10% interest on their money instead of .005% the bank offers. That should be a no brainer to them. My bank tries to get me to put money in their CD's and savings account ect. I thank them and tell them I'll invest my own money and make 200-400+% instead of let them invest my money and pay me half of 1%.
c) Get a personal loan with a local bank. Rates and terms will be different from bank to bank but your best bet is a local bank because they want to establish a relationship with you and be there for all your money needs. Not just the convenient ones like the big out of state banks. Where I do my banking offers unsecured personal loans with 12-24mnth terms with either 10 or 12% interest. 5k minimum. Better interest rate if you secure the loan with something but I like having as little skin in the game as possible.
d) There are other options out there like refinancing your house, ect but personally I think options A - C are your best bet. If anyone reading this has a creative idea that I left out, by all means please let us know!
