Posted by Lin (NC) on February 12, 2008 at 18:04:31:
The apartments (which I did buy) have some slow payors, too, but I was really talking about my self storage tenants.
First deal done - Posted by Dave (WI)
Posted by Dave (WI) on February 03, 2008 at 21:55:49:
We completed our first deal today on a 1984 14’ x 70’. Bought it for $2,000.00, will have put about $3,000.00 into it by the time all is said and done and sold it for $15,000.00. Got my check today for 10% down, $300.00/month for the next 63 months. This is making my wife think that maybe I wasn’t as crazy as she thought. This was probably a much bigger project than I should have started with as we had to panel the entire interior since every wall had more holes in it than swiss cheese. All the carpet (for the rooms that had it) had to come out and a 14’ x 19’ addition needed to be drywalled and finished. This was a great learning experience for my kids, they got to learn to use some power tools, saw what the “inside” of a sink and toilet look like, and found out that drywall mud and wood putty can cover a multitude of sins. And most importantly, they saw how much money it costs to finance something; the $13,500.00 note I’m carrying will net me $18,600 by the time it’s paid off. Those numbers make quite an impression on 2 college kids paying tuition and a 14 year old who gets $5.00/wk for allowance. The only advertising we did was the sign in the front window and I had 4 people look, 3 of them decent prospects. The couple that bought it called me yesterday morning, looked at it in the afternoon and accepted my full asking price after a 15 minute inspection. I offered them a deal if they finished the trim and put in the carpet but they said they didn’t know one end of a hammer from the other and would let me do it. I think for the $4,000.00 off I offered I would have learned how to use a hammer.
It took me two years of debating with myself, of quelling my fears and educating my wife about the positives of this business before I took my first step. I know that the next steps will only get easier now that I GOTC.
Go Dave - Posted by Dr B. (OH)
Posted by Dr B. (OH) on February 05, 2008 at 12:21:30:
Congrats, do it again… and again and…
It gets easier even with the tough ones. Just finished a “free” home given to me by the park. I passed on this home 5 yrs ago because it was so bad. Ceilings leaking everywhere, 8 roof trusses rotted and broken, bad floors, bad walls, bad kitchen, bad water pipes, bad W/H elements, ok bathroom. I would have passed again but the PM begged me to take it so another lot didn’t go empty. Plus she was throwing me other good deals left and right. I let it sit for nearly a year (no lot rent) while working on other homes. Finally, I pulled all the stuff I was storing in there and fixed it with my two handymen. I’ve got waay too much in it at $6K but it turned out extremely well and we sold it for 9K before I could get in there and clean it. The buyers were so thrilled, they cleaned it immediately and moved right in. Guess who else is thrilled?-The PM.
btw these are the most solid buyers we’ve seen in 5 yrs.
Happy Trail(er)s,
Steve (who loves to see a happy customer)
Congrats Dave!!! - Posted by Tony Colella
Posted by Tony Colella on February 04, 2008 at 19:55:07:
As others have said, the first one is the hardest for a variety of reasons but most of all it is the process of proving to yourself that this business actually works for you, where you live and just like Lonnie teaches.
Congrats to you and your family.
Tony
Way to go! - Posted by Lin (NC)
Posted by Lin (NC) on February 04, 2008 at 11:07:16:
Great job fighting fear and taking action. Your work isn’t done quite yet. Don’t forget to follow up and teach your buyer that payment is expected as agreed, and you don’t come by to collect it or call to remind them. It needs to be in your mailbox (or whatever you agreed on) by the due date.
The first time it’s late I would give a courtesy call (and tell them “This is just a courtesy call because you’re new to this, you won’t be getting one next time…”) and let them know that payment is now due, with late fees, immediately. Do not put off posting a late notice (pay or quit)and starting eviction proceedings (or whatever your paperwork and state law dictates)right away. They’ll see you mean business and hopefully it won’t happen again with any regularity.
How do I know this?? I’m retraining all the tenants I inherited from a burned-out landlord that they need to pay on time or go somewhere else and it’s much harder than training them right the first time.
Lin
Congrats Dave! - Posted by Ryan (NC)
Posted by Ryan (NC) on February 04, 2008 at 07:25:11:
That first deal is the hardest with out a doubt… It’s all down hill from here. =)
I’ve yet to find anywhere else that will consistently give me 200% returns like this, welcome to the addiction…
Best wishes,
Ryan Needler
Re: Way to go! - Posted by Sherm
Posted by Sherm on February 04, 2008 at 14:41:38:
Good post Lin on training tenants or buyers. I have learned the hard way about the job just beginning with some Lonnie deals. I started with these deals about four years ago. I have had some deals go really well and some turn out not so well. Many times the ones that did not work out well were because my screening was not too good or the park was not too appealing to buyers. So I tend to chuckle when people are figuring their yield when the ink is not yet dry on their note.
The first Lonnie deal I did was on a trailer that was about twenty years old at the time. I did’nt pay much for it, but I spent about a week working on it and about a thousand dollars in materials. I eventually sold it on a note after meeting with many potential buyers and fielding more phone calls than I care to think about. I was overjoyed and eagerly calculating my yield. My joy was soon tempered about two months later when they moved out just before the payment was due and left me with and empty trailer and lot rent to pay. As luck would have it this occurred in November and was not resold until Late February only after I had replaced the frozen pipes. Suddenly I was wondering where that yield had gone that I had been figuring a few months earlier. I then began to calculate my real cost that I had in this trailer. I figured out how much time I had in finding the trailer and negotiating the deal. Dealing with the park manager, doing repairs, showing the trailer, reviewing applications, making the sale, and collecting the payments (lack of training)fixing the pipes. When I figured my time at just 15 dollars an hour, i was floored! From there on I vowed to calculate my yields only after considering my “true cost”. Now on the flip side I have done some Lonnie deals that went off without a hitch and paid off in full.
The last few years I have concentrated on buying partial notes on Lonnie deals at a healthy discount. My real yield is running well over 40% and I do not have to touch a trailer or talk to one park manager or collect one payment from a buyer. I buy from note holders that have good credit and are dependable. Sometimes I do not even have to look at the trailer if I know the note seller well enough. It took me a few years to realize that DOW is really about collecting high rates of interest and not about trailers.
Hey Lin? - Posted by Robert (SC)
Posted by Robert (SC) on February 04, 2008 at 13:56:04:
Is this on the apartment building that you bought (or were going to buy)?
Just curious…
Re: Way to go! - Posted by Don-NY
Posted by Don-NY on February 05, 2008 at 05:10:18:
Dave, You are off to a great start. With a $3000 downstroke I am confident that this deal will be a money maker. Sherm’s first attempt sounds more like an education by fire steep learning curve than an investment. And even that worked out as a small positive deal. IT WORKS!!! keep going