The mobile home park manager called and said the bank had repossessed a mobile home and wanted to get it off their books. (Another non-performing asset –I love ’em.) The owners had abandoned the home and left it in poor condition and the bank was the “stuckee.”
The park manager gave me all the information and asked if I was interested. You bet I was! I was like a hound dog that had just jumped a rabbit; I could smell blood.
The banker knew the home needed considerable repairs and had told the manager they didn’t want to spend any money on the home. They just wanted to get rid of it. They were willing to deliver the title to anyone who would pay the delinquent lot rent and clear it from their books.
I expected at least four or five months worth of lot rent to be due. But to my surprise, it was only $370, which covered the current month. And this was due on the 9th of the month. I had three weeks before any more rent would be due.
When I checked the home over, I found it had considerable floor damage and the roof needed sealing. The repairs consisted mostly of the bathroom and living room floors, a coat of roof sealer, and some clean up.
So, even though it looked bad, smelled bad, and needed work, I knew from past experience that this home had all the potential of being another super deal. Also, included with this home was a refrigerator, range, and air conditioner. These items alone were worth more than $370.
Sitting in the middle of a gold mine
This was one of the better parks in the area, with 178 homes and a good demand for lots and homes. The lady who managed this park was very competent, an excellent manager, and she had been managing that park for many years. Just several months earlier, I had given her a copy of my book, Deals On Wheels, and explained how she could make money in used mobile homes.
I even offered to “hold her hand and walk her through” her first deal. And I know she read the book and knew exactly how and what I was doing with mobile homes. She didn’t realize it, but she was sitting in the middle of a gold mine. I tried to explain to her that this bank repo would be an excellent opportunity for her to get started in the used mobile home business.
But her mind was flooded with negative thoughts. She was afraid of “all that work” that was needed and paying lot rent if she couldn’t get it sold. She didn’t want it, and I couldn’t convince her to buy it. So I paid the bank $370 and relieved them of another “non-performing asset.” (Bless the bankers and their non-performing assets.)
The yield was so obscene, I’ll let you figure it out
I bought the home April 9th and hired a man to make the necessary repairs. My cost was $140 for material, $520 for labor and $60 for advertising. My total cost (including the $370 to the bank) was $1,090. The home was sold on May 4th–before the lot rent was due–for $6,500.
My buyer paid $500 down and signed a note for $6,000, payable at $222.16 per month for 32 months, 12.75% interest. Subtracting the $500 down payment we received, leaves us with $590 in a $6,000 note. Not too shabby for an old mobile home nobody wanted, huh? The yield on this deal is so obscene, I’m almost embarrassed to tell you what it is. I’ll let you figure it out.
The buyer has one more payment to make on this note and the home is his. Wonder if I could convince him this would be a good time to let me trade him into a nicer home and keep those payments coming in?
That evil monster called fear
Now, why did this lady park manager let such an excellent money-making opportunity just pass her by? The reason is obvious: FEAR. Fear, that evil monster that cripples so many people and prevents them from taking action and doing something with their lives.
She was afraid to try something new. It was much easier for her to do nothing and get nothing than to try something different and reap big rewards. She just wouldn’t budge from her comfort zone. She was stuck.
As a result, she didn’t just miss this one deal, she will also miss all future deals that she could be doing had she just been willing to overcome her fear and take action.
The sad part is, she doesn’t even know what a mistake she made by doing nothing. People that keep doing the same things keep getting the same results. As an illustration of my point, just last month this same lady referred another seller to me. As a result of her referral, we bought a mobile home lot and the mobile home for $22,500.
We sold the home for $10,900, received $7,000 down payment from the seller and a note for $3,900 payable $201.42, 12.75% interest for 21 months. And we’re renting the lot to the buyer for $225 per month. This easily could have been her deal, and she could be receiving those payments every month. But fear cost her another good opportunity. Don’t let fear hold you back.