Posted by Chuck (AZ) on July 10, 2001 at 24:21:31:
Yes, that would work… but it goes against the grain, so to speak.
Let’s say you find a home that’s worth $20k, but you can get it for $10k. You clean it up and put it back on the market. Eventually it will sell… maybe not at $20k, but it will sell.
Now let’s say that you bought 2 or 3 homes with that same $10k. Wouldn’t that give you 2 or 3 times the opportunity to profit on both the principal and the interest? Wouldn’t you be able to sell these lower priced homes much faster? With lower down payments, and lower monthly payments? Don’t forget the lot rent that will be involved here… these need to be affordable.
That’s the whole concept of a Lonnie-deal… buy low, resell at a profit (double your money), and then repeat it. Don’t tie up all of your cash in one home, maximumize your investment dollars for maximum gain.
Play with the numbers on the examples above, and then tell me which looks better to you, which is more profitable.
Have read DOW and MM with MH. Have checked out the parks in my area with MH’s for sale. Have called on about fifty homes. About five sound like possible deals. How do I figure what I will be able to sell for. Two of the homes I called on were already sold, so I can compare to those, but two sales aren’t enough for me to base my investment decisions on. Is there some percentage of asking prices that is perhaps a more realistic indicator of what I may be able to sell mine for. I must know how much I can sell for before I determine a price I am willing to buy for. By the way, thanks to all in advance for your responses. Looking forward to getting this first deal out of the way. Then I’ll be on my way.
Posted by Chuck (AZ) on July 09, 2001 at 19:09:03:
Ok, one more time.
(That means that we’ve covered this ground before, and you’ll hear it until your ears turn to mush).
Don’t look for homes to buy. Look for MOTIVATED sellers.
What’s a motivated seller? Someone who needs or wants to be rid of the home today or at least this week.
MOTIVATED = CHEAP
How do you find them? Go talk to the Park Manager (aka the PM). They know what’s going on in their park, they will be your greatest asset.
Shoot straight and tell the PM what you do up front, but don’t be jazzed about it when you do, try to be professional. Read Lonnie’s comments on this in his books and see my posts on this forum. (I’m an investor and a PM, so it’s probably worth the time involved).
How much to pay? Again use Lonnie’s books as a guide, but general rule of thumb is to buy for $2k-$5k and sell for $5k-$9k. Don’t make the mistake of thinking you can turn a profit on a $20k home, it won’t happen. Those folks are in debt but not yet desperate, and you couldn’t help them at that price anyway.
Concentrate on “how much down?” and “how much a month?”… that’s what your buyers will be looking for, the actual sales price is rather irrelivant at that point.
If your cash short, consider selling the first few notes for a quick return, you’ll be able to buy more homes to resell faster. After you’ve done 4 or 5 start holding some of the paper. But continue to turn 1 or 2 so you’ll have cash to work with. When you hit the right balance, you’ll know it.
One of the homes I am considering has a carport, a 20x20 awning. Its in one of the nicest parks in the area, complete with lakes and playgrounds. He says the interior is in “nice” condition. I haven’t seen it yet. It’s a 14x70 1979 model.
What I am trying to figure out is what will it sell for. That way I can figure out what is the most I could pay. He started asking $9000. I got him down to $7000 on the phone. I think he is motivated. I left a brief message on his machine. I told him to call me back and leave me a message with the number of beds/baths, the model, and his asking price. Also , whether or not he was negotiable. He called back fifteen minutes later. We talked (he did most of the talking) for about 30 minutes. If you were in my shoes what would you do next. I told him that I was looking for something like what he had, and that I might call him to come look at it this week. My gut tells me that I could get $10,000 or maybe more. I just don’t know because of the age of the home.
Why can’t you make a profit… - Posted by RobertR CO
Posted by RobertR CO on July 09, 2001 at 20:00:29:
…on a $20,000 home. Using your philosophy, Chuck, we find motivated sellers not homes. The asking price may be irrelevant if we can buy from a motivated seller, substantially below what we can sell it for. In this case, it may not be a Lonnie deal. We just need a satifactory profit after all holding and sales costs. If you do not want to market the home for all cash yourself, then make sure you have the broker’s commission included in your costs of sale.
Hey Chuck(Az) take another look at this, please!! - Posted by Chuck (AZ)
Posted by Chuck (AZ) on July 10, 2001 at 10:13:04:
Regardless of how nice it is, or what it looks like it’d bring, if you can’t get it for $5k or less, I’d pass.
Your right, the age of the home is the factor here, and that’s what’s you need to focus on. There are plently of mobiles out there just as nice, and several years newer, that are selling the same, or less, money.
Don’t put more into a deal than you can get back out of it. A good rule of thumb is to plan to make 2x what you invest, and buy with that in mind.