Park manager are the key to Lonnie Deals

Park manager are the key to Lonnie Deals:

 

I am a huge fan of mobile homes. Dollar for dollar, I see no other investment that compares to the great returns you can achieve with these properties.

 

Returns typically run from 33 to 120 percent… or more. Did that get your attention?

 

If it didn’t, let me explain. Anytime you hear the words “return” or “yield” and see a percentage, pay attention to it; the percentage tells how well an investment performs. Essentially it let’s you how much of your initial investment you’ll get back annually.

 

So a 33-percent return means you get a third of your money back each year. It also means in three years, you’re paid back in full. Anything after that is profit.

 

A 120-percent return means you receive all your money back in the first year, plus an extra 20 percent in profit. How many investments do you know of that can do that?

 

The 33 percent returns tend to happen with land home deals. That is a mobile home on its own land. The 120 percenters are Lonnie Deals. That’s where you buy a mobile home on a rented lot for cheap. You then put it back on the market and offer it with owner financing.

 

A typical Lonnie Deal goes like this: you buy a single wide for $3,000. You do absolutely no rehab, and you offer it for sale with owner financing. You receive $1,000 down and take payments of $300 a month for three years. The return on it is 179 percent. Can you say, “Yeah Baby!?”

 

So why aren’t people falling all over themselves to do these deals?

 

Lonnie Deals are done in mobile home communities, which usually have a park manager. The manager’s job is to make sure lot rent gets paid on time, that the riff raff stay out, and that the business of running the park goes smoothly.IMG_1999

 

Managers come in all shapes, sizes and backgrounds, but make no mistake, inside the park, they have all the power. That power comes with a trump card called eviction. They have the right to evict home owners for anything they deem inappropriate. When you get evicted from a house, you’re supposed to take your stuff and get out. In a park, taking your stuff means moving your trailer.

 

The last time we moved a single wide, it cost us $7,000. As you can see, an eviction in a mobile home park isn’t cheap. This is why you must get the park manager on your side.

 

The way you accomplish this is by first getting permission to do business in the park. The first time you meet, the manager will probably say no, but don’t lose heart. They say no because they don’t know you.

 

For a park a manger, control is everything. When you tell them you want to buy a house, sell it, and allow someone to make payments, what the park manager hears is “you want to be a landlord in my park.”

 

This makes them feel like they’re losing some of their control, but it is an easy problem to circumvent. Tell the manager you don’t want to be a landlord and that you just want to be the bank. Also, let them know you want them to approve every buyer. And then agree to not sell a home to anyone the manger vetoes.

 

Once you establish a good relationship, the park manager will become the key to your success. It is like they’re your park “realtor.” They’ll start giving people your number and even bringing you deals. Here is a tip: when they bring you a deal, reward them with a finder’s fee. Realtors like commissions. This will get the manger working for you.

 

Joe and Ashley English invest in real estate in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com

 

 

2 comments

  1. Joey,

    Great little snippet on the business. I would add some things form a park owner perspective (since I am one):

    Don’t fool with the manager. I, for one, do not give them decision making authority very often. They more or less do what they are told to do. There are processes and procedures in place and their job is to follow them. Not decide what they are. I would welcome a Lonnie Dealer since I know their role is beneficial to my business, my managers are typically ignorant to this. Look up the owner on county records or go post your services where park owners frequently occupy their online presence. We have a need for each other. Reach out directly instead of reaching out through a manager. All in all, I am the one who can make your relationship with the manager pleasant or unpleasant with a simple phone call.
    If you reach out directly to the decision maker, there are a few things I can help you with. For one, I’ve done more of these deals than you have and I have infrastructure and resources in place to help you screen & manage your resident. This is mutually beneficial since your residents are also my residents. Let the park owner help you screen or at least offer to give that control to them. In the end, it will make all of our lives easier if we both agree the resident has some quality.
    I would like to address Mark’s concern on lower credit worthiness. 80% of Americans live pay check to pay check. Those Americans have basically the same risk factors as the folks who live in my parks. What separates the ones who make it in to my communities vs. the ones who don’t is their willingness to fight for what they have. We interview our customers along with credit/criminal/background. I want to know they are fighters so I know I am secure during the hard times. If they are not a fighter, I don’t do business with them. As Frank Rolfe says, there is a FICO and there is a FightCO. I value option two.
    Lonnie Dealers provide value to our business. Please, feel free to reach out to owners. Our industry is changing rapidly and younger blood is moving into the industry. If you are interested in this type of investing, you will find that the doors are opening up in this industry every day someone like me closes a deal from an old school operator. I like Lonnie Dealers and I value the service you provide. Understand that there are many like me who also own parks.

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