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.
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