5 free junkers, but no experience, help! - Posted by Brian

Posted by Dr. B. (OH) on September 17, 2011 at 12:03:36:

Its a plus that it is a 14 wide and built the year of HUD code requirement (1976). It is a minus in most markets that it is short and only 2BR. Everybody wants a 3BR. Depending on how close the park is to Saint Louis, '80s 3BR homes may sell O.K. but no ball of fire.

I visited SLU with my son in April and saw that the city has really cleaned itself up in the past 25 yrs. But also that a monstrous Chrysler plant is selling for $1/sq.ft.

Your approach in #2 is fine. Be aware that sellers want as much as they can get for their valuable home when they have no time-line. Motivated sellers always have some kind of deadline for which the “worth” of the home is less important than the desire to get out.

Time is on YOUR side.


5 free junkers, but no experience, help! - Posted by Brian

Posted by Brian on September 15, 2011 at 19:03:59:

Ok, so I have been hard at work, reading, cold calling,
putting ads on craigslist to learn the supply and demand in
my area, etc. Today was my first time walking through a
couple mobile homes in my area and I think I MAY have
stumbled on a good opportunity after speaking with a park
owner and making friends.

I started off looking at a home in the park listed for 4200.
It is move in ready, and I think if I can get it for 2k I
will go ahead and do my first Lonnie on it. After the walk
through, I went and talked to the park manager who
conveniently told me she has 5 homes as give aways. She
also said no pad rent for three months. She directed me to
one of the houses which had no door on it, so I walked on
in. Actually, I take that back…I had to CLIMB in because
there was no porch or stairs. It was a mess! There was
trash everywhere, soft spots in the floor, no sink, and
pretty much not habitable. She said that is roughly what I
can expect from the other 4.

My questions:

  1. What’s my risk of “buying” these? They are free, and no
    pad rent for 3 months. I am assuming if I can’t rehab/sell
    them within 3 months I will owe pad rent? Maybe I can
    convince the park manager to let me work on them, but then
    walk away if I can’t unload them for like 2k a piece?

  2. Who will do the work? I pretty much can’t do any
    repairs myself. Should I ask around the park for someone
    who does mobile home repairs to work at like 15 bucks an
    hour part time for 2-3months?

  3. Where will I get materials? Obviously I do not want to
    be putting thousands of dollars into materials, I just want
    to make them habitable. Any suggestions? I will need
    replacement windows, a sink, some doors, etc. Suggestions?

  4. Should I take one, or all of them? I have not even done
    a Lonnie Deal yet, but this seems like a low risk
    introduction since I am only on the hook for what I want to
    spend on materials provided I can sell them within 3 months.

  5. Problem…the park manager she is not interested in
    chasing down the title since the previous owners all split.
    She has a bill of sale for them though. How will I sell
    something that I TECHNICALLY never own? They would have to
    request the title back from the DMV right? I can’t do that.
    Does this make the deal a no go, unless one of them has a

  6. What’s my exit strategy or best plan in general? No
    rehab, just clean up, and flip the bundle to a rehabber for
    1k a pop? Clean and do minimal repairs and maybe try to
    sell each for 2k and 300 bucks down? Full rehab and try to
    sell them for 3-5k a piece?

Like I said, I am new to this, but have been reading for
weeks. What’s my best course of action from here? Provided
no one takes these tomorrow, I will head back on Monday to
give the PM my answer.


need some help? - Posted by Steve-WA

Posted by Steve-WA on September 19, 2011 at 09:37:35:

I may be out of line here, but there are a couple of firefighters in O’Fallon who used to be regulars here, Marty and Ray. They were partnering in Lonnie Deals, and some L/H deals. Ray had a serious accident a coufple of years ago, and they have faded from the forum, but check the archives for Marty (MO) to get his email. You may have a mentor closer than you think. And all those beers you are wanting to buy will easily get fulfilled!

Run, don’t walk to the nearest exit (long) - Posted by Dr. B. (OH)

Posted by Dr. B. (OH) on September 16, 2011 at 08:03:45:

Congrats for getting off the couch. That is the most important step. Now take smaller steps.

Let me address your questions 1 by one.

  1. What’s my risk of “buying” these?

  2. Who will do the work? I do a LOT of the work myself and have two occasional helpers. One has been with me for 7 yrs. He works so fast and well, I had to increase his pay to $20/hr. under the table to keep him coming back. The other is $15/hr. and also excellent. This year I paid another (recommended) guy $15/hr. because the other 2 weren’t available. He did very good work and didn’t take unnecessary breaks but still took TWO TO FOUR TIMES longer than my other guys.

3.Where will I get materials?
Prices for materials has gone up tremendously. Unless you can source a steady and wide supply of used materials, as Mike says, you will have at least $4000 in one of these. Over the past 8 yrs I have spent an average of 1,847.74 in materials on 22 “free” homes. Over the past year it has averaged 4,863.78. Two of which I lost $$ on (and I’m experienced!). My overall average repair cost for 104 homes is $1383.37. With an average purchase price of $1,725.93 added to the $1383.37 in materials, that means I’ve put an average $3109.3 into each home with a range of as little as $170 (sold for $900) to $12,776.52 (sold for $12,000) NOT including 30-90 hours of my own or others’ labor per home!

4.Should I take one, or all of them?
None of these. Never take more than one fixer upper at a time when you only have 3 mos. to repair. If you had 6 homes available with three mos. grace per, you would have 3 mos to get them ALL done, or one at a time, 18 mos. (3mos X 6) to get them done in series.

5.Problem…the park manager she is not interested in chasing down the title since the previous owners all split.
Problem, Problem, PROBLEM, PROBLEM! If your state has titles to trailers, YOU MUST HOLD TITLE or you have ZERO, ZERO, ZERO control. P.s In most states, only the landowner can apply to the state for abandoned title. Apparently your park does not find it worth it for these homes.

6.What’s my exit strategy or best plan in general?
Not owning the trailers gives you no exit strategy as there is no entrance strategy. Owning ANY structure on someone Else’s land, gives you limited control. In this case, just fixing structures on someone Else’s property is just giving them free money. You will end with a headache, broke and having fixed THEIR problem.

All that being said, stick to manageable homes with MOTIVATED SELLERS. If that first deal you saw for $4200 is being sold by the park, run away from that park altogether. Even if that home is being sold by an individual, you have to wonder who wants to pay decent money and live in a park with 5 wrecked homes? How much can you realistically sell that home for on contract? Lets say $4000. Then, in that park, I would not pay more than $1000 for that particular home. What is the seller’s motivation to sell? Wait until they are even more motivated. As has been said before, you don’t have to buy anything tomorrow, next week, or next month but the seller may need to get out in 3 weeks. Wait them out or let some greater fool buy it for more money.


Re: 5 free junkers, but no experience, help! - Posted by MikeT/NC

Posted by MikeT/NC on September 16, 2011 at 06:33:51:

If you do a full rehab on these you will have 3-5K in
each one. More if you hire all the work done. There’s
money in the move in ready trailer but if the park owner
can’t give the others away I don’t see how you’re going
to profit from them.

Re: need some help? - Posted by Brian

Posted by Brian on September 22, 2011 at 07:25:55:

Thanks a lot. I am going to do hat right now and fire
off and email if I can find it. I would be anxious to
just hear how they did.

Re: Run, don’t walk to the nearest exit (long) - Posted by brian

Posted by brian on September 16, 2011 at 11:03:51:

Dr. B,

Could you detail step by step what you would do on the
4200 house I looked at? It needs minor plumbing in the
bathroom, and maybe some new carpet and paint, but
that’s about it. Here is my plan…that way if you
respond with yours I can compare the two, or maybe you
could just critique mine.

  1. She said she wants out before Oct. 1 because of lot
    rent, so I am delaying any offer until a few days
    before then, BUT I am going to factor in that 350 bucks
    into my purchase price and numbers.

  2. On Sept. 25th or so, I will call back and hope she
    still has no offers. If that’s the case, I will start
    talking about all the repairs, and how I think they
    will run me about 1k. I will also STRESS the fact the
    park has FREE homes, so why should I pay for hers when
    I can put 1500 into the others and live there? (She
    doesn’t need to know those others need 3k-5k of work :wink:

  3. I’ll gauge her motivation and probably start an
    offer around 1200, with a target of 1500 or so. Once
    again, I will use the repairs to my advantage (even
    though I might not make them) and also the free homes
    in that park.

  4. If I get 1500 or less, I will put 500 or less into
    it for a total investment or around 2k in a 4200

  5. I will list with a sign in the park, outside the
    park, and on craigslist right away for 5k, 500 down. Or
    4k all cash. I will probably do 3 payment options, all
    with similar yields, but just to give options to


Re: Run, don’t walk to the nearest exit (long) - Posted by Brian

Posted by Brian on September 16, 2011 at 10:10:18:

great post and love the stats you keep! I am the same
way with my two professions (trading and professional
poker) and understand it is a MUST to track literally
every penny in any business, and then work on improving
that edge by whittling away at your leaks or expenses.

A few questions for you to follow up though, since you
obviously have a ton of knowledge and experience, I
feel like I should do the smart thing and ASK rather
than plop 10k into a project and learn the hard way!
:wink: Hope you don’t mind!

  1. I was thinking of doing the same as you, but my
    guesstimates were way off on material expense. Are you
    renovating to the point where they are “nice” or just
    habitable? I was only planning on habitable.

  2. My main concern was WHERE to get the material, not
    necessarily how much. Obviously I can’t stroll into
    home depot and expect to find bargains. You have made
    it a point though that materials are just not out there
    for cheap anymore, so a major rehab should be out of
    the question and I should just let the park trash these

  3. Say one of them had a title, I had a repair guy
    recommended, AND I got some leads on materials. Would
    you say get that one for free, or still try to buy the
    4200 one for 1-2k?

  4. Why do you put nearly as much into homes in repairs
    as you do the purchase price? Is that optimal? Are
    you increasing value so much by buying homes that need
    1400 bucks of repairs? Or are you better off buying
    something that only needs paint and new carpet?

You seem to like the rehabbing part, or atleast think
that is optimal compared to doing a more typical lonnie
deal. Can you just elaborate on why that is?

Even if you don’t answer any of these Q’s this post
from you was super informative and if for some reason
you are EVER anywhere near St. Louis, MO I owe you a
beer! :wink:

Re: 5 free junkers, but no experience, help! - Posted by Brian

Posted by Brian on September 16, 2011 at 10:12:19:

I would be getting them for free AND 3 months lot rent,
but there are major complications. I mentioned all
this in my first post. :wink:

Also Steve’s response pretty much summed up the best
strategy…run away! But I am still interested in
other’s experiences with the free homes.

Re: Run, don’t walk to the nearest exit (long) - Posted by Dr. B. (OH)

Posted by Dr. B. (OH) on September 16, 2011 at 12:53:57:

What are the stats on this home: year, size, #bedrooms #bathrooms, condition of park as compared to others in area?
#1 Where is she moving to? Why out by Oct. 1?
#2 Good plan
#3 Try not to make an offer other than, “I have to buy at a wholesale price to make any money, but I can give you cash” “I’m your last resort”.
#4 Is her $4200 listing realistic in the first place? This may be a $2000 retail home. See what other homes in what condition sold in that park. Talk to the PM and locals.
#5 Sounds good.


Re: Run, don’t walk to the nearest exit (long) - Posted by Dr. B. (OH)

Posted by Dr. B. (OH) on September 16, 2011 at 12:45:26:


  1. Are you renovating to the point where they are “nice” or just habitable?
    Habitable to me means, no roof, or water supply leaks. No scary elec. issues, no outlet boxes hanging out of walls, water heater and furnace work. No holes in the floor. It is still a fixer upper and needs drywall and/or ceiling repair, new vanity, counter tops and/or cabinets, carpet, linoleum, skirting, paint. I no longer rehab anything earlier than mid 1980s unless special circumstances.

  2. WHERE to get the material…
    Some materials can be found at used or damaged resellers. Habitat for Humanity has places called “Re-Store”. Usually they don’t carry things like OSB, 1/4 luan, or drywall. Carpet typically costs $500-1500 in materials.

  3. …one for free, or still try to buy the 4200 one for 1-2k?
    There are posts in the archives about how “free” is not free. In most markets an old 70s 12 x 60 2BR is obsolete. The only people that want these in less than immaculate condition are desperadoes. Right now I am taking some of these near-habitable ones, putting in $150-$500 and selling for 800-$1500 cash. But they have to be mostly intact. Any 70s home costing more than $500 to fix gets passed. The parks won’t let you get away with many of these. They want nice-looking habitable homes in their park that attract nice tenants.

The park prefers the home look nice from the outside. That means, roof coat ($160), paint ($120), skirting ($500), and no broken windows ($16-$150) (materials only). I’d shoot for cheap on the $4200 one, less effort, better home after rehab-assuming it is not a 70s 12 x 60.

  1. Why do you put nearly as much into homes in repairs as you do the purchase price?
    Be careful of averages. In most cases, the lower the purchase price, the more the rehab and vice-verse. If we average the two categories separately, we happen get similar dollars.

Besides, you’d be surprised what $1400 can do in THE RIGHT HOME.

  1. You seem to like the rehabbing part, or at least think that is optimal compared to doing a more typical Lonnie deal.
    Sometimes rehabbing is called forced appreciation. But again, you have to BUY THE RIGHT HOME in the first place. Many homes in parks need rehabbing. There are virtually no new homes coming into the parks and it costs $3000 to move a new or old one in. There are only so many excellent homes with MOTIVATED sellers that come available, so rehabbing brings additional owner-financed contracts. Besides, I have a knack and vision for rehabbing. It is more time/cost-effective if you can just do pure Lonnie Deals but they are becoming more rare. Thus part of my my bearish position on this business.


Re: Run, don’t walk to the nearest exit (long) - Posted by Brian

Posted by Brian on September 16, 2011 at 13:11:23:

Once again, awesome posts Steve and I really appreciate
it. I can’t stress that enough.


14x60 2/1 1976 in a park that I would give a 5-6 out
of ten. The park is probably struggling given the fact
they are offering to move in new homes for free, and
also give 1-3 months free pad rent to new

  1. She is moving to a bigger MH bc she needs more
    space for her two kids. She wants to avoid the 350 lot
    rent due on the first.

  2. Thanks.

  3. Should I just let her name a number after saying
    that? Something like, “Susie, listen…I have to buy
    wholesale to make this work for me. This home is a 76,
    it needs about 1500 dollars of repairs, but I can give
    you cash today. I am your last resort since this thing
    has been sitting so long for sale. What’s the best
    cash price you can give me?”

  4. This is the area I struggle. Sellers views of how
    much their homes are worth are SOOO distorted. I
    constantly find ads for mid 80s homes for 10k, and
    their reasoning is bc they have “put so much work into
    it” or something. I’ll ask around to learn more about

Are late 70s models basically obsolete at this point?
What if I told you the average MH age in that park was
low 80’s? I find it hard to believe I am going to get
one of these mid 80s models listed for 10k for 2-3k,
but maybe I just need a few more months of cold

I want to do one deal a month, but I want my first one
to be as painless as possible, hence all the research
and thought, posting here, etc.