Do you hide the fact your an investor? - Posted by Jeff

Posted by Ryan (NC) on August 23, 2008 at 19:05:37:

How much down? How much a month? There is no set rule, YOU write the rules as you go along for down payments and monthly payments.

If you have a 5k house and can get 1k down and 1k a month thatâ??s great, if you can only get $500 and $200 a month but you only have 2k in the home that’s ok too. I sold a 7.8k home today with $500 down $220 a month, that’s only 6.41% down, why would I do this?

I had already sold the unit once, collected $750 down and 4 payments of $220 on a $2000 investment and I have a lot rent payment coming due for $135 on the 1st that I really don’t want to pay if I can help it. The lady today is a good person that I believe will stay long term, she’s a waitress at a local restaurant and doesn’t make much but she has two almost grown kids and put simply she seems to have her priorities straight. I know a bunch of folks and regularly hold closings at the restaurant she works at and if she wasnâ??t serious I highly doubt that sheâ??d go through with the deal, plus she’s great at her job! So let’s see $750 plus $880 is $1630 minus $462 in lot rent leaves $1168 I have received on a 2k investment plus the new down payment of $500 and I only have $332 left in a 7.3k note after 7 months.

The key is to buy right and fit the home to the right buyer, then you can bend most every conventional real-estate rule and still do ok. I only have to collect 1.51 more payments on this note to break even on the purchase… If I was talking about a 15k unit that I had 5k in it might be a different story.

Best wishes,
Ryan Needler

Do you hide the fact your an investor? - Posted by Jeff

Posted by Jeff on August 21, 2008 at 13:42:40:

when you go look at a mobile home, do you act like you are going to live there or are you upfront about being an investor?

Better to be an investor - Posted by Karl (Oh)

Posted by Karl (Oh) on August 22, 2008 at 22:04:37:


I most definitely let a seller know that I’m an investor. My whole pitch is based on them understanding what I do for a living, and what the realities of the mobile home market are. So here’s what I say to a seller when I’m buying their mobile home. This assumes that their price is too high, and youâ??re trying to work them down to make it a deal.

First of course I meet them and chat a little and let them know that I’m friendly and I’m not going to strong arm them and try to break them in half. I want them to be comfortable with me and like me, so they’ll speak more freely to me about their situation, to help me determine how motivated they might be. I always work from the assumption that there are an infinite number of deals out there to be had, so thereâ??s no hurry on any one deal. What I mean is don’t be a motivated buyer (unless its a screamin’ deal!).

You can walk through a home and decide in just a couple minutes what you would be willing to pay, depending on if you’re moving it or keeping it in the park, etc. So I have that figure in my head. Then I ask them what they’re trying to get for the home (even though I usually already know from their phone call) because I want them to look me in the eye and say their number to see how committed they are to their price. Its funny how sometimes a seller will talk tough on the phone about they’re price, but every once in awhile they’ll fold like a deck of cards when they’re face to face. Now at this point if their price and my price are close, and itâ??s a fair price, we’ll put a deal together. You don’t always have to draw blood just because you can. If their asking price is reasonable, talk them down another $500 and write them a check. Thereâ??s nothing more fun that buying a home for a great price in 10 minutes! But thatâ??s not usually the case, thereâ??s usually a big difference in our two positions.

After I’ve looked at the home and broken the ice a little, here’s my standard pitch. I tell them what my business is, that I’m a dealer that sells homes like theirs on payments. I have to, because no one has cash to buy homes. Usually they’re right in the middle of the process of learning this. I say that I mostly buy bank repos, usually 5 or 10 at a time (sorry, not true, I always buy them one at a time, but I think it helps my pitch), and I get them for great prices because I pay all cash. I buy very few “for sale by owners”, because frankly we usually can’t agree on a price that I’m willing to pay and a seller’s willing to accept. Iâ??m trying to let them know in a nice way that thereâ??s a whole other market out their for cash buyers thatâ??s working against them selling their home. So at about this point I tell them what their home would be worth if it was a bank repo. â??I know youâ??re asking $10k, but Iâ??m buying this same home for $3k from Vanderbilt. Yes, you have a very nice home thatâ??s certainly worth what you’re asking for a buyer who wants to live here, but right now I’m getting much better deals from the banks, so I just canâ??t pay your price.â?? So I’ve just told them that we’re probably not going to be able to work out a deal. I’m hoping to get them to chase a little.

Then I ask them how they’ve been trying to sell the home, and what luck they’ve been having. Thatâ??s when I hear how frustrating it is to try to sell a mobile home. So I offer them advice. Can they sell the home on payments? Because really thatâ??s the only way to sell mobile homes. No, they really need all cash. Have they run an ad in the paper, put a sign in the window, put up signs at the store or Laundromat? The reason I go through all this is to let them know how much work and time it takes to sell a home. And hurry, lot rent is coming due. Even though Iâ??m giving them good advice, they just want someone to give them cash! They donâ??t want to have to work at it! Iâ??m just trying to soften their position.

So usually at this point I give them my card, offer to help them any way I can, and to call me if they get to the point where they can move enough on their price for us to make a deal. I tell them that I’m not their best deal, but I can be their last resort if they get to that point. And here’s the important part. If they do call me back later, I want them to remember me as the one guy who was polite and honest and helpful. So if they’re going to sell their home for a bag of peanuts, better it be me than the other investors who were jerks.

Hereâ??s what has happened a hundred times. One or two months later I get a call from that same seller who now wants to accept my offer. When this first happened to me, I called Tony Colella and told him this story. He said â??Yeah, we call those 60 day dealsâ??. It seems that it takes about 60 days to motivate the average seller to cut a home lose at the right price.

The last FSBO I bought was from an older gentleman who had already moved out of the home but was still paying lot rent in a unfriendly park nearby. He was asking $8k for an â??89 2 bed/1 bath with a deck and awning in very nice shape. He told me right off the bat that someone else had already offered him $7k. Great, Iâ??ve wasted my drive over here. But I still did my 10 minute song and dance, and told him that the home was only worth $3k to me, but give me a call if his other deal fell through. He said OK. I said what do mean, OK? He said Iâ??ll take your offer. I said what? You have another offer for $7k! He said that guy hasnâ??t shown up with any money yet, and I want to sell this thing now! So I bought the home right there. Here I was ready to wait the guy out for 60 days! Anyway, I moved the home for $4k, and sold the home on a note last week for $16.9k.


I know why you asked that, Jeff… - Posted by Heather (NY)

Posted by Heather (NY) on August 21, 2008 at 21:24:11:

…because I was wondering the same thing!

DOW doesnâ??t directly address it. The impression Iâ??ve gotten from reading the archives is that most beginners wait till seeing it in person as opposed to over the phone, and then at that point let the seller know that youâ??re a â??dealerâ?? or that you â??work for a mobile home financing companyâ??.

I talked to a woman the other day over the phone, and I felt goofy not telling her that I wouldnâ??t look at it to LIVE in. I didnâ??t because I was worried she wouldnâ??t be as open with me. I think itâ??s because I called her- she wasnâ??t responding to one of my ads- I was responding to one of hers.

My husband and I both read DOW and MMWMH less than a month ago, but itâ??s time to read DOW over again. Lonnie is an EXCELLENT business man; not so excellent at organizing the book (personally, I think it may be intentional- we need to work for our own dough, heâ??s not going to do all the work for us!). So tonight Iâ??m going to take more notes and tomorrow Iâ??m planning on actually sitting down and writing out a chronological step by step process for us to go through in order to accomplish our first deal. Iâ??m a logical person, algebra is my favorite subject by far because of itâ??s orderly processes. Not having a plan written in front of me to refer to is driving me CRAZY!

Of course, after writing out my very own step by step program, I may come to find out I did it entirely WRONG, and I need to get the insurance BEFORE the title, or some silly mess up. But it will be worth the effort to feel more confident in my business. Instead of wondering… â??Okay, do I approach park managers first or run ads in the paper???â?? and then staying stagnant because I have no idea what to do, at least Iâ??ll have it written already and follow the steps, right or not. Theyâ??ll be comprised of DOW and the archives at this board.

Iâ??d offer to send you a copy when Iâ??m finished, but I have a feeling it will probably need continual tweaking!

I think I will post it here and see what response I get from the experienced crowd. It goes without saying each deal is different and not to expect to see the same deal twice, etc, etc. I know it will just be a guideline, not a be-all end-all list. Hopefully Iâ??ll have a better idea in my head of what to expect.



Re: Do you hide the fact your an investor? - Posted by Todd(AZ)

Posted by Todd(AZ) on August 21, 2008 at 18:39:14:

Personally, I think it helps that they know you are an investor. It cuts thru the b.s. about how much they want for the home because they updated the cabinets, put in carpet 2 yrs ago, or whatever other silly reason they come up with for wanting full price for the home. It’s non-emotional for us vs. someone who might buy it to live in it. I also casually mention the fact that times are tough, homes are not selling fast, and I will have to pay lot rent until it sells so therefore it has to make financial sense or I’m sorry but I just won’t buy it. No need to hide this. Todd (AZ)

What’s to hide? - Posted by Dr B(OH)

Posted by Dr B(OH) on August 21, 2008 at 16:32:57:

Many motivated sellers will assume you have more credibility if you are an investor. They assume you have the cash, more experience buying, and more likelihood of following through than a tin can kicker (tire kicker).


Re: Do you hide the fact your an investor? - Posted by Dave (WI)

Posted by Dave (WI) on August 21, 2008 at 15:56:45:

I tell them up front what I do and so far no one has had a problem with it. No sense in making up a story about living in a home only to have them see a For Sale sign in the window the day after you take posession. People will talk and the “bad” stories always spread much quicker than the “good” ones do.

Re: Do you hide the fact your an investor? - Posted by Shawn Sisco

Posted by Shawn Sisco on August 21, 2008 at 14:24:00:

I tell the seller that I’m a dealer.

Karl time to write a book - Posted by David

Posted by David on August 23, 2008 at 13:40:14:

Karl when are you going to write a book about mobile homes? Your answers and observations are always very good. You have a gift for getting right to the point and making it seem simple. Lonnie wrote a few books that are very good,but it seems to me after reading a lot of your entries you could take it to the next level, just like the response you just gave. You seem to have a lot of experience with dealing with repos,moving trailers,dealing with people and on and on. I will buy the first copy.

Guidelines - Posted by Frances

Posted by Frances on August 21, 2008 at 22:34:24:

Heather…you and I are definately on the same wave length and I feel the same as you about the guidelines.
I feel there are a lot of steps to follow along the way as you deal with Park Managers, Sellers, Buyers and all the required steps in between. I’m afraid I’m going to forget something important. For weeks I have been trying to determine if or when I need insurance and also what type BEFORE I sell it to a buyer.

If you would kindly send me a copy of the guidelines and any info and contacts on insurance (I’m in Louisiana) I would greatly appreciate it. My email is:

Insurance - Posted by Steve-WA

Posted by Steve-WA on August 22, 2008 at 07:30:03:

What you and Heather need to do is find an insurance guy, sit down and ask THEM these questions. Describe your business model, and then they should be able to fill you in.

In this business, you will not GET a checklist, so put that thought away right now. True, DOW does not tell one EVERYTHING, but you have to have a little go-get-it-iveness on your own, or this is not the business for you.

With that said, I also value this and other web resources for the virtual brainstorming that helps us, in today’s business climate, to do better than to learn from our own mistakes: we can learn from others’ mistakes and never have to make them ourselves. With that said . . .

What you need to ensure is that your buyers get a homeowners policy for a sufficient amount to allow them to at least pay off their note with you and clean up the mess if their house burns down tomorrow. How you do this is a personal decision. Many people (and I think this IS in DOW) make the buyer get insurance themselves, and show written documentation before you hand them the keys.

What I and many others do alternatively, is to call my independent agent (he can get quotes and write policies witht he cheapest at the time) with the prospective buyers’ info and info on the MH, and he gets me a quote. For instance, Sally Smith wants to buy my MH for $10K. The note will be for 10K or a little less (downpayment). We sign a sales agreement, she works on getting park approval and I work on an insurance quote. I tell my guy her name, SSN, and birthdate, and give him the address of the MH, the park name, the size, make, age, and VIN. Does it have a woodstove? Outbuildings (shed)? Gas or electric heat? Yada yada yada . . . I want her to have homeowners insurance for 12-15K, and we include coverage for contents of 15K, and liability for 50-100K. I got a quote the other day for a guy of 237 annual premium.

You tell Sally this number, and collect it at closing. I collect the annual amount, so I know she is insured for a year, then she gets billed next year. I take this out of the “downpayment” money, so the dent on the purchase price is less (I also take transfer fees out of this). My insurance guy has iven me a blank signature page for the insurance application, so I have Sally sign this too. Then after we close and she gets the keys, I call ins guy, tell him to write a binder, and then I mail a check for the premium amount and the signed application page.

For a minimum amount of effort, I have ensured that she is insured. And frankly, most buyers wouldnt have a clue about how to go find insurance, so they blow it off, then you get to closing and they’re not ready.

Now there is a population of successful investors who don’t require it at all - they say they don’t care if the buyer has insurance or not, because of the low likelihod of loss. Well, I suppose, but I personally have had two buyers burn their homes down, and because of insurance, I have gotten paid, so I’m a little biased.

Good Advice - Posted by Heather (NY)

Posted by Heather (NY) on August 22, 2008 at 14:38:40:

Wow, thanks Steve, for the info on insurance! Your post is saved in my favorites now.

I just threw insurance out there because itâ??s something I havenâ??t checked out yet and because itâ??s got to go on my to-do list anyway. I do plan on contacting an agent. Thanks so much!!

Frances, Iâ??ll be happy to send you what I whip up, but as far as the contracts, Iâ??m just using the discs that came with my Lonnie set. Insurance will probably be local, not sure where to begin contacting companies. Probably will just open up the yellow pages and start a-calling!



Re: Insurance - Posted by Karl (Oh)

Posted by Karl (Oh) on August 22, 2008 at 08:26:05:

Hi Steve,

Here’s how we do our insurance. We tell our buyers that they either have to have their own insurance by the time we close, or we will collect $50 at the closing and buy insurance for them. The $50 is enough to get their insurance started with our agent. We fill out the insurance application at closing, fax it to our agent and drop a check in the mail. Then the buyer is billed monthly after that.

Our experience is that once a buyer gets insurance, even when paying monthly, most of them keep it going. Thats why we don’t require a whole year up front. If a buyer does miss an insurance payment, we get notified as the lienholder and crack the whip so they don’t let it cancel.


Karl, down payment question - Posted by Heather (NY)

Posted by Heather (NY) on August 23, 2008 at 12:10:25:


I was just reading in the archives that back in â??04 you allowed the down payment to determine the price of the mh. Do you still do that? It was in a thread about how much down you should require. DOW is pretty clear it should be $500 of $5K or 10% of the selling price. In the thread though, posters (like Anne MD) were stating they wouldnâ??t take less than a thousand down. My question is, even on a 5K mh, $1000 down is required? Does that include down payment and first monthâ??s payment or is that just the down period?

Thanks in Advance,


Re: Insurance - Posted by Steve-WA

Posted by Steve-WA on August 22, 2008 at 08:49:34:

I found that the companies that even had a monthly payment plan were more expensive, so again, this even more illustrates my point that this is one of those aspects of the business model that is not the same for everyone.

Sorry to have missed your call the other day - was away on a family vaca. Let’s try again - I’m back in operation.

Re: Karl, down payment question - Posted by Karl (Oh)

Posted by Karl (Oh) on August 24, 2008 at 20:15:32:

Typically I require a minimum of 10% down on any home, whether its $5k or $25k. That’s based on what I know works in my market. You may want more, or be happy with less. The only time I go less than 10% is if the home needs work, and the buyer is trading some downpayment against the condition of the home. For example, I might take $500 down on a $15k home if the buyer is going to paint and carpet.

What I like about sticking with a minumum percentage down is the fact that it helps match buyers with homes. At 10%, a buyer with only $1k down can only get into a $10k home or less. If he can’t scrape together $2k, then I don’t trust him to take care of and make payments on a $20k home. That sounds really simple when I say it, but that does make sense? The rougher a buyer is, the cheaper the home they’re allowed to buy.

To answer your other question, yes, I still adjust the price based on the downpayment a buyer can bring to the table. Typically, I’ll knock $1k off the price for every additional $1k they can put down. I sold a home last Friday to a guy who kept telling me he thought the $16,900 home that he liked was overpriced, and kept at me to bring the price down as we walked the home. When we finally sat down to work out the numbers and he made a run at me again on the price, I told him about my downpayment policy. He said he could only afford the 10% right now, but could have another $2k in a couple months. So we wrote in the purchase agreement that if he could pay an additional $2k within 90 days from his date of purchase, I would still adjust the price down by $2k. For him those were the magic words that made him happy and buy the home. Now I doubt that I’m ever going to see that extra $2k, but its going to be hard for him to complain about the price again, since he helped determine it.