I am about to close on my third “Lonnie Deal” and my yields are improving significantly. My partner and I purchased a 3BR/2 BA, 1983 mobile home in fair condition for $1,400 cash and the two lots for $16,000 with $2,000 down and owner financing for the balance at 7% and payments of $200/month.
It has taken us a little more than two weeks to find a buyer, after having two previous buyers back out. The first buyer said that they would put $1,500 down and the other wanted to put $3,000 down, but they never finalized the deal.
I was beginning to think that the mobile home was a tad bit over-priced, but I decided to stick it out because our first payment of $200 on the owner financed lots was not due until November 1st. If you mobile home folks really want your phone to ring off the hook, place an ad in the “mobile home for rent” section of the paper with the following head line: RENT TO OWN.
I received that suggestion from Dan, and I also read about it in Lonnie’s book. [Deals On Wheels]
I got about 10-12 calls per day off that ad, so I stopped it after two days. I just couldn’t keep track of all those calls. I finally received a $300 deposit on October 1st on the home from a young couple looking to move out on their own. They have agreed to put down $1,000 and pay $320/month for 48 months at 13.13%, and their lot payments will be $280/month. Our payments are $200/month, so we will make $80/month on the lot.
The couple was very appreciative to have their own home and thanked me for giving them the opportunity to buy the home, even though the home needed quite a bit of work. The home had floor damage; cabinets and carpet needs replacing.
They said that it would be no problem for them to repair it because the husband had done that kind of work in the past. He also said if I needed in any type of repair work done in the future, to give him call, and you can bet that I will take him up on his offer.
If anyone can give me the yield on my deal, please let me know. My calculator keeps returning an “ERROR” message. Anyway, if my calculator cannot compute my yield on this investment, then it must be “GOOD NUFF.”
The numbers on this deal are:
Purchase price of mobile home: $1,400
Sales price of mobile home: $12,900
Down payment: $1,000
Interest rate: 13.13%
Monthly payments: $320
Total # of payments: 48 months
I now have the VP of a local bank willing to loan me up to 65% of remaining balance on unseasoned notes and 75% on seasoned mobile home notes (over 4 months old), so that I can expand my. Thanks for everyone’s helpful advice. And, no, this will not work where you live. (Kidding.)