Lonnie Deals in Action

Today is a bittersweet day. We had a Lonnie Deal payoff for the very first time in over six years. It’s bitter because we just lost the $275 income stream this deal was paying us and now we have to go out and replace that money.


It’s sweet because I just got a text from my good friend named Mike Hicks. Mike’s a smart investor up in the Rossville area. Recently, his beautiful wife, Teah, joined him as part of their full-time real estate investing team. I met Teah for the first time last month when I presented at the Chattanooga Beginner Investor Meeting, BIG for short, hosted by Chattanooga REIA.


While there, I presented on several deal structures that had the most impact on Ashley and me when we got started investing, emphasizing Lonnie Deals as the structure that had the biggest significance on us financially and allowed us to get out of the rat race.


I see Mike at a lot of the seminars I go to. Something I love about him is that as soon as he gets home from a class, he tries to figure out how to put what he learned into action. Now that Teah is part the team, they are going to be doubly effective. Ask me how I know.


The day after the Chattanooga BIG meeting, Mike and Teah were out looking for Lonnie Deals, which is where you buy a mobile home on a rented lot for cash. The investor then sells that home and offers owner financing. A typical Lonnie Deal for us occurs when we buy a home for $2,000 cash and then sell it for $500 down and 42 payments of $300 a month.


Mike and Teah aren’t your “typical” investors. They are way better than that. The text I got from Mike said they had purchased a mobile home for only $1,000. They immediately put the home on market to sale and within a week got a buyer willing to put $500 down and make payments of $250 a month for 36 months.


Let’s put their numbers into the financial calculator to see just how good Mike and Teah did.


Remember that there are five inputs on the top of a financial calculator. They are as follows: N= number of payments in months, I/YR= interest or yearly return, PV= present value of the loan or investment, PMT= payments and FV= future value. And in order to do a calculation, you need four of these five pieces of information.


We want to measure how well Mike and Teah did on this deal, which means we want to know what their yearly return (YR) will be. YR tells you how much of your initial investment you will receive back each year. The greater YR is, the better the deal.


In order to determine PV on this one, we need to take the amount Mike and Teah paid for the home and subtract what they got for a down payment. So they paid $1,000 for the home and got $500 as a down payment. That’s a net negative $500 for PV. That gives us one piece of information; the other three we can plug and chug from the deal. So:






N= 36 monthly payments. I/YR=? because that’s what we’re solving for. PV= -$500 PMT= $250 a month and FV=0 because the loan will pay off at the end of 36 months.


That means Mike and Teah’s first Lonnie Deal has a yearly return of 600 percent! That’s a super high return. How is that even possible you may ask? Well, after the first two payments of $250, they have all of their money out of the deal. The rest is pure profit. I told you these guys were smart. And that’s how you put a Lonnie Deal into action.


Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.


  1. Hi there!!

    Couple of things – I found you initially on Bigger Pockets and then connected to your website here. Fantastic! The amount of information you’re sharing and the effort I’m sure it takes to maintain this site is a big deal – so thanks!! I’m in Chattanooga/North GA, so I’m pretty much in your backyard.

    I’m new to real estate investing but I’m willing/ready to take on an opportunity. Your articles on Lonnie deals is super interesting and enticing.

    I’ve been researching mobile homes for sale and so far I haven’t come across anything remotely close to the investment prices you mention. Do you find that even though someone has a property listed for 15-20K, that they’re significantly coming off that price because you’re a cash buyer and mobile homes can’t be financed through normal means?

    For a newbie interested in this option, are there any articles/books you would suggest? Or, at least some sort of checklist/guidelines? OR dare I say mentoring? (Now I’m getting greedy:-) )
    AGAIN, thanks for the time and info!

    1. Hey Susan,
      You need to read Deals on Wheels by Lonnie Scruggs. Lonnie literally wrote the book on how to do these type transaction, hence the name “Lonnie Deal”. Here is a link to where you can by the ebook for $6. https://www.cashflowdepot.com/education/products/books/deals-on-wheels/

      As far as price, People will ask 15-20k because that is the perceived value. However, they will not sell it for that price because no one is willing to put up that much cash for a mobile home in a park. I have made offer on houses listed for that amount at my price,$2-$5k and gotten a yes because they needed to move. Remember Susan, you have to make your offer based off of what works for you, not just what the seller is “asking”. What they’re asking and what they need are two very different things.

      I have plans to teach a workshop on Lonnie Deals in 2018. When I do, I will post it on the blog. But red Lonnie’s Book. It will give you what you need to get started.

  2. Hello, I am about to invest in my fist few “Lonnie Deals” here in Michigan. I have not read “Deals on Wheels” yet but i have it coming in the mail soon. I am a little worried about a thread i read on BiggerPockets that tells me that Lonnie Deals may be considered predatory in regards to Dodd Frank. What have you come across in regards to this?


    1. Great question Brad.
      Done correctly, Lonnie Deals fall within the guidelines of Dodd Frank. When you get Deals on Wheels book from cashflowdepot.com, there will be a forward in it that addresses what you need to do in order to comply with the law. Study that and you will be fine.

Add a Comment

Your email address will not be published. Required fields are marked *

Pin It on Pinterest