Oh B-1 can no beat.
That title was supposed to sound like the Star Wars character Obi-Wan Kenobi. Yeah I know it’s a stretch, but bear with me.
The reason I chose that title is because B-1 is the lot number of a Lonnie Deal we have down in Acworth. And I want to tell you about it because, to reference Star Wars again, “the force is strong in this one.” Sorry, I couldn’t resist.
We bought B-1 two years ago. The seller needed to move in with family members because of health issues, and they didn’t think they could sell their place because of roaches, some soft spots in the floor and the fact the house was jammed full of stuff.
When I asked them what they needed, they told me they would give us the title to the home if we would help them move.
So, we gave them the $250 it took to rent a truck and hire some guys to move, and they gave us the title to the home.
Now you’re thinking, “Wait, are you saying you bought a singlewide mobile home for $250?” Yes I am.
I believe mobile homes are one of the best investments out there. Dollar for dollar, I’ve found very few things that can compete with the returns trailers bring. Our strategy on B-1 was to do a Lonnie Deal, which is where you buy a house for cash on a rented lot and then sell it using an installment sale.
Most of the time on a Lonnie Deal, you do no work on the property. If it needs work, you simply sell it as a handy special with a reduced down payment. But since we got this one for so cheap, we decided to work on it.
We got our exterminator out and did a small rehab after which, we were all in for just over $2,000.
The first time we sold it, we got $1,500 down and $250 a month for a term of 42 months. However, after 10 months, the buyers moved to Florida and left us the house. Put that into your financial calculator and see what return you get. (Hint: don’t forget to subtract the down payment from the initial investment when you enter PV. Enter 10 months for N and $250 for PMT)
Don’t be shocked when you see a triple digit return. Like I said, as with most Lonnie Deals, the force is strong with this one.
Before they left, our vacating buyers put new cabinets and countertops in and even installed new exterior doors. Gotta love that!
We put the property back on market, got another $1,500 down and payments of $250 a month for — you guessed it — 42 months. This time, however, the people only stayed six months.
You would think getting a house back would be a bad thing, but it isn’t. Every time we get a Lonnie Deal back, we get another down payment and start the payclock over.
So far we have had $7,000 worth of income on this house. Take out the $2,000 initial investment, and we are still $5,000 in the clear in only two years’ time.
When I went to secure the house this time, I noticed something. The floors in front of the doors were weak. Do you remember those new exterior doors the first buyers put in? They didn’t flash and seal them properly, thus allowing for water intrusion. So now we had a choice: put it on the market in the condition it was in or fix it ourselves.
Thinking it would be less work, we decided to put it on market as it was and sold it for $6,000 cash. But now I have to get to work replacing the cashflow we just lost.
With those proceeds, I can buy enough Lonnie Deals to double — or possibly triple — B-1’s original cash flow. And now you know why you can’t beat B-1.
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.