Posted by Steve-WA on October 19, 2008 at 14:54:14:
that is called being “re-active” . . . most investors would know that the way to make the best deals is by being “proactive”.
What a silly response, Sam Chevel, IMHO.
Feedback on this deal - Posted by mroberts
Posted by mroberts on October 16, 2008 at 10:17:01:
Hey guys, this is a great forum and I really appreciate any feedback. We are looking at our first Lonnie deal investment, and the details are as follows:
- Located in Los Angeles County, CA.
- 1959 single wide 12’ wide.
- Great condition, except for hole in ceiling (just ceiling, not roof) due to removal of swamp cooler. We plan on fixing the hole in the ceiling, cleaning, and that’s it.
- Owned by park, asking $5000.
- Park is willing to grant a space rent exemption for 45 days while we market the unit. Space rent is $800/month.
- Similar units in the park have sold for $10-13K.
What do you guys think? Again, thank you for your feedback!
Re: Feedback on this deal - Posted by Dr B(OH)
Posted by Dr B(OH) on October 18, 2008 at 14:19:09:
Tye is watching your back before you even start. I would also recommend shooting for triple your money when going in on your first deal. That way when you discover the leaking hot water heater, $1200 in back taxes (you should already know this), $300 water bill, broken bathtub faucet, roof leak, burnt out furnace, soft floor around toilet, frequent unapproved applicants, etc, you can still make it. Believe me, as a nuB, you’re likely to miss something. I still miss things that I shouldn’t but I am a lot better at it than on day one.
Steve
Re: Feedback on this deal - Posted by Sailor
Posted by Sailor on October 16, 2008 at 18:05:08:
Swamp cooler likely means, if not now, this trailer has been on the desert. Is the present cooling system appropriate for the location? Please note that NO 1959 trailer is in “great condition.” You just haven’t yet identified all the problems.
How long can you pay the $800 a month when the park turns down your applicants? How far would you have to travel to repair/show/clean, etc. Do you know your tenant pool? Are there folks willing to live in a 12 ft. wide 50 year old trailer & pay $800 lot rent?
I recommend that you learn everything you need to do this deal just for practice. There is not enough potential profit to offset the risks. If this is over the pass from LA, I bet there are plenty of stick-built deals for someone w/5k to invest. A lot of MH investors are switching to SFH to do their Lonnie Deals. Good luck & keep us posted on what you learn.
Tye
Re: Feedback on this deal - Posted by mroberts
Posted by mroberts on October 18, 2008 at 14:27:59:
Great feedback guys, I really appreciate it. I gave the property a more detailed inspection and am going to offer much less - probably around $3500 - or maybe even less. We should be able to triple our profit as a result and have more flexibility in the deal. How do you find out about the back taxes? I’m glad you brought that up because the previous tenant failed to pay the rent for the past few months. Could be a good possibility they did not pay taxes either.
Re: Feedback on this deal - Posted by mroberts
Posted by mroberts on October 17, 2008 at 10:19:13:
Thanks for the feedback sailor. Are you from Southern California? It sounds like you are assuming that the trailer is located in the high desert areas over the mountains from the city. It’s not, it’s actually located in an urban area just east of downtown LA that is only about 20-25 minutes from my house. Space rent of $700+ is pretty normal. The swamp cooler doesn’t surprise me either, considering the age of the unit and the climate. The swamp cooler was removed and a window AC unit has been installed. As for paying space rent myself, I’ve negotiated with the seller for a 2-month space rent exemption while I sell the property. Do you believe the deal to still be risky even with that? As for any other problems that might exist - I am going to be doing another more detailed inspection today. I wasn’t able to inspect too closely last time because the previous owner still had some stuff in the unit. Other similar units have sold in the park for $10-13K recently, so it seems like the profit potential is there. Lonnie says to make sure you can double your purchase price, and it appears that I can do that. As far as I can tell, the numbers seem to work OK. Your thoughts are appreciated on that.
Re: Feedback on this deal - Posted by Ryan (NC)
Posted by Ryan (NC) on October 18, 2008 at 18:27:03:
“am going to offer much less - probably around $3500 - or maybe even less.”
We don’t make offers on a regular basis, this is one of Lonnie’s golden rules… Using the magic words works! What’s the best you can do for cash money today… hmmmmmm… are you sure that’s the absolute best you can do???
Reread the negotiation chapter in deals on wheels, I stand by what Tye’s said for the rest.
Best wishes,
Ryan Needler
Re: Feedback on this deal - Posted by Sam Chevel
Posted by Sam Chevel on October 18, 2008 at 16:00:54:
One way to find out about back taxes is
when the sheriff puts a notice on the
front door. Then you will know everything that
there is to know about the back taxes owed.
Hope That This Helps
SamChevel
Re: Feedback on this deal - Posted by Sailor
Posted by Sailor on October 17, 2008 at 18:38:26:
Yes, spent many years there. I guessed, but did not assume a desert locale (though most of the region would be if not for the importation of water). Yes, I think the deal is both skinny & risky, but the beauty of cutting your teeth on Lonnie Deals is that you only risk enough ca$g to write it off as education. If you list the ways this deal could go wrong, you’ll have a better understanding the risks. It’s also a good idea to list what has to happen for this deal to go right.
Note that I do far fewer deals than Lonnie, so on most deals I set my profit target at triple, not double. That gives me more margin for error, as it always takes more $$$ & much more time than allowed.
Post your lists & we can fill in some of the blanks–
Tye