A few months ago, I was looking at the CRE Online website because I have always been interested in real estate investing. There are always several very interesting articles and ideas with which to make money investing in real estate.
One of the articles caught my attention because it seemed simple, and it also seemed that a person could make good money if they applied themselves. The article was written by Lonnie Scruggs about buying old mobile homes and creating notes, whereby the buyer will be obligated to pay you a certain amount of money, possibly $200 to $350 cash flow each month until the note is paid off.
I checked into this more and saw how people such as you and I could make 30% to 80% return on our money. There are cases where we can make more than 80%! I ordered Lonnie’s books, Deal on Wheels and Making Money on Mobile Homes, read and studied them, then checked out the local situation in Nevada, where I live. I found out that it is best to become a dealer to do things right. After two months, I found myself a “Used Manufactured Home Dealer.”
Since I received the dealer’s license, I have been able to close four transactions. The first one was purchased from a finance company who had mobile home repos. I purchase it for $10,000 and sold it for $24,950 after putting about $2,000 into it. I was happy with the rate of return.
The next three were referrals from a park manager. One day I was looking at another bank repo (that I later decided against buying), and a lady came up to my truck. She told me that she was the park manager and that once in a while there were people living in the mobile home park who had mobile homes for sale. There was one up in the park currently. I ended up buying that one for $11,000 and put $1,000 into it, then sold it for $19,950.
Two days later, she called me with another one that I purchased for $2,500, put $1,000 in repairs and sold it for $5,995.
A couple days after that, the she called me with one that the people were asking $3,000. I came out and looked at it, and it needed a lot of work. I offered them $1,000, and they took it! Right now I am in the process of fixing that one up and will have approximately $4,800 invested, including purchase price. I have a buyer right now waiting for me to finish. We have already settled on a price of $12,999.
Referrals from the park managers and referrals from past buyers (if you do a good job and treat them fairly) have been the major source for new deals. It is important to work with the park and try to accommodate them when they ask you to do something, such as to put new skirting on the home. That is not hard to do and will cost you only a couple hundred dollars if you do it yourself.
Many times the past buyers that you have treated fairly will have a friend who needs a place and they will call you. That is how I found the buyer for the present home I’m working on. Treat people the way you want others to treat you and do a good job without cutting corners, so you end up with a quality job.
This is a great business because you are not only helping yourself to make money, you are taking an old home and helping it out, so it can be used for many more years. You are helping people who may not be able to own a home, yet still have the American Dream of home ownership. Their income tax situation is also helped because they are now able to deduct a mortgage interest on their income tax return, which will save them hundreds of dollars in taxes.
In a few years, they will have a home paid for, and they can sell and move up or just live in for years to come. It is good good business, with many rewards, but you have to “get out and circulate” as Lonnie Scruggs says. Get out and do it!