Posted by Tony Colella on September 27, 2005 at 20:54:22:
Yes and no.
Yes, there is some truth that investing can be a numbers game as you suggest however let’s just bear in mind that we are not buying retail and as such our target market is not the same as the realtors 6 year owners.
I do agree in farming that neighborhood and becoming the expert there. Some Bandit signs at the ingress/egress may help.
But getting to the motivated sellers will be the key. Much like a Lonnie deal, we need an inroad to the desperate-to-sell folks.
Find that makes life much, much nicer.
Tons of land home deals - Posted by JeffB (MI)
Posted by JeffB (MI) on September 27, 2005 at 08:15:26:
A few weeks ago I posted that I had been rejected for a surety bond, needed to get my dealer’s license. This may have been a blessing in disguise. I approached my local Farm Bureau’s insurance to try again (thanks Tony/Scott!) and told the receptionist what I was looking for. She said, “Oh yeah, I just had to get a surety bond for a mobile home I own and am trying to sell…”
After talking with her for a while, I learned she inherited a 79 D/W on 3/4 acre which she has been renting out for 6 years, but does not have title for the home. So she had obtained a surety bond which is needed to get a lost title, which she can then retire. She’s asking $77k and had three full price offers on the home, but (surpise, surprise) nobody could get financed. She was paying all the buyer’s closing costs, which gave her a net of $67k, which I’m using as a starting point. The home has been rented for 6 years straight with no vacancy (different tenants during this time) for $800-$850 per month. This one may or may not work out to be a great deal, we’ll see.
After doing a drive-by I found several other deals in this subdivision of mobiles on land. There are over 200 of them, on 500 acres. Lots of open space and large lots. I found one with a trashed s/w, which would have to be hauled off, for $30k by a very motivated seller. There are similar homes listed in this subdivision listed as high as $115k for a single wide, or $140k for a new D/W. My next step is to pull comps and see what these things are really selling for. From a Tony/Scott cash flow perspective, some of these are no-brainers. But I want to make sure I can buy at a substantial discount to market value, to capture equity when I buy…especially since appreciation around here has been flat for a few years.
I’m excited. It’s funny how one little conversation can open your eyes to new possibilities. I did not even know these land/home deals existed in this area. Thanks to the boot camp I’m now able to recognize these opportunities instead of missing out. So many of Lonnie’s principles still apply… let the seller talk, just listen, and it’s amazing how much you can learn.
I’m pretty confident I’ll land at lease one of the deals I’m looking at here. Hopefully I’ll be able to post a success story here soon!
Re: Tons of land home deals - Posted by James
Posted by James on September 27, 2005 at 20:01:01:
Real Estate agents are often advised to start farming a local neighborhood where they can build rapore and trust with the locals. My own father and his wife bought from an agent, who then, 6 years later, knocked on the door, and told them the comps in that area were indicating the house had appreciated $60k in the 6 years. POW! Great timing! The wife wanted to move near her son, and they took their 10k per year (on $80k start, ande moved)
So… work that neighborhood often, right now I’d say weekly if you have the time, and distribute something so you are seen, and able to meet and talk to people.
Remember my mentioning moving. That was for a reason. The average American moves every 6 years. You have 200 homes, divided by 6 means you should have 30+ moving there per year, as a base. As Michigan winter moves in I would let my appearances decline to 6 weeks with snow and then ramp up as it melts.
Next spring you should have the neighborhood ready to spring into bloom for your business, so to speak.
Re: Tons of land home deals - Posted by Tony Colella
Posted by Tony Colella on September 27, 2005 at 17:27:56:
Isn’t amazing how that happens. It’s like buying a new car and suddenly you see that exact same car everyone you go.
I remember Lonnie deals being the same way. At first I never noticed mobile home parks. Once I started doing Lonnie deals, suddenly I found parks everywhere.
I like the 200 plus land/home packages you have found. Not a bad number to start with!
Good luck and let us know how they go Jeff.