Posted by Bryan-SactoCA on April 02, 2003 at 20:01:45:

I see your point. I’d hate to have to walk away from a MH because I couldn’t get cash. The $2k is extra money-all the essential expenses have already been covered by the insurance setlement and the $2k was left over. (A little background: Grandma gets inheritance in 2000, buys me a new car for $17k. Two years later, the car is totaled. The insurance settled for $10k, which went to replace Grandma’s old car and my car and do thorough checks of both replacement cars. $2k is left over.) The cash in the bank is earning .5% (yes, half a percent, says so on my statement) so it would get much better returns putting it in a Lonnie deal. And I have several emails from people interested in buying notes that I didn’t respond to because I was trying to do it without selling the note. I’ll reply to those people tonight (I apologize for the delay if they’re reading this).


Posted by Jon on April 02, 2003 at 09:13:38:

I’ve been reading up a little on mobile home investing and here is what I do not understand. Basic example. Let’s say you purchase a mobile home for $3000 and sell it for $6000. You get $1000 down and take a note for the remaining $5000 at a 12% interest rate. Okay, you’ve made a great investment. But what if you only had that $3000 to invest? You can’t buy anything else. You’ll have a cash flow coming in but it won’t be enough to buy anything for a few months. I suppose you could find investors if you’re lucky or maybe use a credit card, but how long can you live on credit. Not to mention it truly cuts back on your return. It would be nice to have 15 or 20 notes bringing in $200 a month, but let’s say each home cost you around $3000. That’s $45 - $60,000. I just don’t see how you build a continual cash flow when you only have a limited amount to invest.


Posted by KenS(WV) on April 03, 2003 at 16:03:53:


I started out doing the risky thing. I get about 5 credit card applications a week. One month I sent in several and got some pretty high credit limits on a couple of cards. I took this money and bought 3 late model repo homes. I made between $8,000-$13,000 cash on each home. It took me about 7 weeks (not bad 29K/7weeks=$4,142/wk). You must then pay your taxes then reinvest the amount left over in another set of houses. By then you buy them in multiples from Conseco or Chase or someone else. You can really get them cheap. Some friends and family saw what I did and said they wanted in on this. The deal was they put 100% of the cost of the home up and I buy, fixup, and sell. We split the profit 50-50. I have done that on 3 homes. Now, I don’t really need any other investors. I have enough cash to buy all the homes I can handle at one time on my own. The funny thing is… I did this to finance doing Lonnie deals and now can’t bring myself to do one because there is too much cash in just flipping. I just bought a land/home package and should double my money on that within the next 8 weeks. That will give me another $30K profit!

I think the key is I am now buying from finance companies and they are calling me to sell their homes.

This all sounds great huh! Now the minor downside. About 3 outta 10 people may qualify for financing. Some have a parent buying them a home, some have an insurance settlement, etc. You will show the house 5-10 times to get the first buyer that may qualify. I had to spend several days on the internet and do some hard networking to find lending companies that would go below a 620 credit score for financing. I have to run credit for everyone that ones to see if they qualify and I eat the cost for it.

Overall, I have done this working a full time job. I am thinking the downside isn’t so bad!

Good luck!

Re: HOW DO YOU MAKE CONTINUAL MONEY? - Posted by JHyre in Ohio

Posted by JHyre in Ohio on April 03, 2003 at 06:40:30:

  1. Use other people’s money. RE investors do this with stick-built rentals and flips, why not MH’s? Yes, you are giving up some of the return…but half or more of something is better than all of nothing.

  2. n re taxes, see my “insomnia” post on how to defer taxes. Chuck-NY’s suggestion on using L/O’s also works well in some jurisdictions.

John Hyre


Posted by Chuck-NY on April 02, 2003 at 21:05:33:

Couple thoughts…why don’t you start by purchasing a $4,000 note for $2,000? Just do your research and try to find a note in your area. You might even be able to purchase a small real estate note for your $2,000. I understand this does not get you more money right away but you might want to consider it.

For purchasing more MHs I use an investor. Put an ad in some local papers “18% yield…secured by home” you might get some calls.

Also consider a Net Lease & Option to Purchase…not a tax problem…a tax benefit.

Re: your astute observation. - Posted by Dr. CRaig Whisler CA

Posted by Dr. CRaig Whisler CA on April 02, 2003 at 12:11:24:

Jon, you are absolutely right. You are 2 years ahead of most others who are new to this board.

You can still benefit a lot by reading Lonnie’s books. When learned through reading, knowlege is cheap. In Lonnie’s case it is priceless. As you get more experience you can modify and adapt his methods to suit your needs.

In addition to the problem you have noted in your post, you must pay your income tax IN ADVANCE of receiving your monthly payments because the Internal Revenue Code says the tax on installment sales is due at the time of sale regardless of when you will receive your payments.

This is still true even if you sell a part of your note. You will still be taxed in advance for your remaining payments before you receive them.

Big Macs excluded, Cash is still King

Regards, doc

tortoise? or hare? - Posted by Steve-WA

Posted by Steve-WA on April 02, 2003 at 09:55:51:

If you spend $30/$60 on Lonnie’s books, it is explained in there - sell your note, or part of the payments. In your example, you get 29 payments of $200. That’s 5800 over 2.5 years. Sell it for oh, 3K, and you have your investment back. You don’t get the payments, but you get a little profit over your initial 3K investment (the $1k down). Next deal, do it again, but sell maybe a year’s worth of the payments for enough to do another. Lather, rinse, repeat. Soon, you will have a monthly cash flow that will supplement, and soon after that, you will have a monthly cash flow that will buy a new MH every month. Not to mention that you gain intangibles: experience, confidence of the PMs, a good name with and references from your buyers, the glory and admiration of all of us here, a Big Mac from doc,. . . Then you are King of the Trailer Park!

Re: HOW DO YOU MAKE CONTINUAL MONEY? - Posted by Chris Reuman (Maine)

Posted by Chris Reuman (Maine) on April 03, 2003 at 18:12:37:


So you buy newer repo’s and flip them to individuals that qualify for a loan. Are the mh in a mhp or on its own land? Also, what are the lenders that you are using? Do they have an age limit for the mh? What percentage of list price do you get the repo’s for? Any information is appreciated. Thanks, chris

my solution: - Posted by Bryan-SactoCA

Posted by Bryan-SactoCA on April 02, 2003 at 14:43:15:

I’m just starting out like you and I too realized this early on. What I plan to do is flip (buy low and immediately turn around and sell high) 6 or 8 mobile homes so I get a decent cash reserve that I can use for Lonnie Deals-I figure around $20,000 in the bank should cover it. If there’s any reason why I can’t flip MHs tell me now, folks (aside from possible difficulty finding a cash buyer).

Re: tortoise? or hare? - Posted by Jon

Posted by Jon on April 02, 2003 at 11:16:04:

Thanks for the info. I’ve considered purchasing Lonnie’s study at home course. Sounds like it may be a valuable source.


Posted by KenS(WV) on April 04, 2003 at 11:16:52:

Except for the one L/H deal, all the homes are in parks. As for lenders, you will have to find the ones that work in your state(do a google search with key works like mobile home lenders/loans/financing). One that I have been using primarily is Nancy Weaver at 888-686-0505. The homes typically can’t be any older than 10-15 years old. I have been buying '97 and newer with only one 1995 model.

I typically buy the repo homes for 20-40 cents on the ARV dollar per NADA value. I sell them for 10-30% less than NADA book value and everyone thinks they are getting a great deal. All the while I just about double my money on each home in just a few weeks.

Good Luck,

flaws in the pie - Posted by Steve-WA

Posted by Steve-WA on April 02, 2003 at 14:53:40:

don’t lock yourself in to one strategy; what if there are no cash buyers? And you DON’T need to build up to $20K - you are just setting yourself up. I mean, if you can get there from here, great! But if there are speedbumps in the road (and we ARE talking trailer parks here!), be flexible enough to make lemonade.

Good luck, Bryan - from your soul-baring post on the main board, it is apparent that your greatest enemy is yourself.


Posted by Jim Schad on April 17, 2003 at 13:04:38:

I just did the same thing…almost. I am in Dallas, TX. Any advice you can give on the financing requirements? I was going to do lonnie deals as well, but the flipping is great to build cash if you can get your cash out. Finding out there are limited people to buy the notes. Did you offer WILL FINANCE - NO BANKS at first then try to run them trhough the bank? How did that work out?

Re: flaws in the pie - Posted by Bryan-SactoCA

Posted by Bryan-SactoCA on April 02, 2003 at 15:34:10:

Right now, I only have about $2000 from an insurance settlement to work with. I probably couldn’t pay the taxes on an installment sale of say $5000 since as Doc noted the taxes are all due up front. If there are no cash buyers (which I consider unlikely) I’ll have to consider doing a Lonnie Deal or whatever else. But I just don’t have the money right now to go buying up MHs and then doing Lonnie Deals on them and paying the taxes. Since you mentioned that there are usually speedbumps on the road, I’d like to know some that you or anybody else here have encountered. By the way, I picked the $20k number out of the air-it’s not something I would religiously stick to.

Yes, I know that, but I always manage to overcome the small negative part of me, although not without a little whining (another thing I should work on).


Posted by KenS(WV) on April 18, 2003 at 06:51:59:

I actually started out to do Lonnie Deals but never quite made it there. I got hooked up with several companies and remarketers that were selling late model homes cheap. I had cash so I bought 4 to start out. My first was a 1998 Dutch 16x80 in good shape with every option available. It had a book value of $37K. I bought it for 12, put 4 more in for a total of $16K and sold it for $29,500. I got a $24,500 downpanyment and took a $5K note. Other than that, all of my deals have been cash or through a lending company. I have alot of buyers that want me to do Lonnie deals but I haven’t focused on buying older Lonnie type homes.

I am in WV and here you have to have a DMV dealer license first. I sold used homes in parks with that. To move homes you then you have to get a contractors license which requires taking two tests. I passed them last week and and got the contractors license. I also need a dealers/retailers license. I just got the last license yesterday. I am about to go to the next step and am thinking of buying a toter.

I have bought every repo in my area and now have to start having them moved to get new inventory. I am in the middle of deal with a park to split the cost of the move and give me free lot rent until sold. If that works, they have a new section with 50 empty spaces.

I figure if I can make $5-8K on each home after all expenses, and I can fill up 50 spaces over the next 12 months, thats good enough…

Good luck,

Do cow chips qualify as pies? - Posted by Dr. Craig Whisler CA

Posted by Dr. Craig Whisler CA on April 02, 2003 at 20:41:19:

One more thing that could trip you up is space rent while waiting for a cash buyer. If you only have 2k and spend it for a mobile home to resell, what if it takes you 4-6 months to find a cash buyer? How will you pay the space rent and other holding costs?

Cash buyers ARE the way to go, but they are very hard to find, especially by newbies. If you can’t find a cash buyer in 2-3 weeks then take a note, before the aligator of reality takes a nip out of your dreams of riches.

Take a note if you must. A cow chip is better than no pie at all. :~)

Regards, doc

Re: flaws in the pie - Posted by Steve-WA

Posted by Steve-WA on April 02, 2003 at 16:20:00:

What if you lost the $2K? If it would be a hardship, then don’t invest it. One of the best things about Lonnie dealing is that if it all goes to he\ on one deal, you only lose a little. If you are willing to take that chance, then consider this as a poor deal:

Buy MH for $2K

Sell MH for $4K on payments - 500 down, 150 x 27 @13%. You have a gain of $2K (bought for 2, sold for 4). Yield is 108% annually. And that’s assuming bad numbers.

What are your taxes a year down the line? ~15% of $2K =$300. So set aside the first two payments; there, taxes covered.

You are down $1500 ($2K, plus $500 down recovered).
In a year, (after setting aside the $300 for taxes, then $150 x 10), you are even, and the next 15 payments are all in the black (15 x 150 = $2250).

“In a YEAR!!??!!” you may be exclaiming. “I want to invest more NOW!” Point taken.

Sell your note, or a partial.

OR, look for a MH you can get an option on, then sell it for cash above your option agreement price. Many people here do this regularly, and many people here find buyers before buying. If you want it, here it is, come & get it . . . but you better get it ‘cause it’s goin’ fast . . . Geez I hate the oldies.

Case in point, Bryan - there’s a lot of ways to do this, and do not let taxes scare you off. Ron LeGrand says that he lives for the day when he has to pay $100,000 in taxes (or was it a million?) . . . think about it . . . how much income generates that much of a tax bill? Good 'nuf.

Plan your work, then work your plan. No whiners.


Posted by Jim Schad on April 21, 2003 at 12:59:38:

My prob is that I can afford to buy say 2 or 3 lonnie style, but I want to cash out of them to take profit and do it again. There are more repos in TX than you can shake a stick at. Am in the process of finding some lenders, but seems they all want home/land together not just the home.

In TX you have to have a dealer license to sell more than 1 a year. I have only done 1 deal so clear for now. Next class is in May so no big deal, pay the $$ and take the class.

Man I wish I could get a HUGE down payment like you are. Seems hard to do when so many here offer Zero down move it today deals. Just have to be patient!


Re: flaws in the pie - Posted by Eric C

Posted by Eric C on April 03, 2003 at 24:59:12:

Hi -

Some good points here. And there are ways to mitigate that tax bite some - best to just continue to make more money.

And about Legrand’s comment, … it sounds good, but I warn you that writing (really) big checks to the IRS is not nearly as much fun as you (or he) might think.

Trust me on that one.

Take care,

Eric C