Deals On Wheels
I was considering doing what this book teachs that is buying a MH wholesale for cash and selling retail with a note for profits. As an example buying for $1000 and selling for payments that would brng a total of $4000-$6000. I was concerned of what would happen if the buyer stopped paying and the cost of repo. Jerry was good enough to post telling me he does this and repo is not that bad or too costly. My new concern is are there people out there that would buy a used home after I have marked it up ? and most of all since I see a potentail for only a few thousand dollars of profit here. Lot rent in my area of Florida is anywhere from $250-$400 a month. Since I don't believe I could sell any MH I buy in just a month or so does'nt this cost potentially eat up any possible profits ? Is there something I am missing here ??
Roger In Florida
Yes, you're apparently just sitting there analyzing it, when you could be out there buying for low cash and selling on notes...just like DOW says.
Try it. It works if you do.
Seriously you need to understand that most MH residents never think like investors, are unable because of their low self esteem to do so...and they need you to help them buy the home they can afford.
So it's hardly taking advantage of them to mark up the price so YOU can profit, then let them buy with low cash dwon and easy payments...and it's worked for everybody who's ever tried it.
Thanks John .... but I am still curious how one might make a profit on a low priced MH when park lot rent in my area is 250-400 a month. I mean it would not take long at these rates to eat up potentially $1000 in profits.
Roger
$400 is about average for MHP rent here in W WA too, but Lonnie deals keep happening, daily.
People gotta have a place to live, and the MH in the MHP is still the only choice lots of folks have to buy their own place.
Seriously, go back and read DOW again and move forward. If the buyer defaults, you take the MH back and do it again, taking a new cash down payment and new note...just like Lonnie says, there's lots of money to be made that way.
Lets work with the numbers presented.
Lots rent assumed to be 400.
Gross profit projected to the difference between the $1,000 purchase price and the $4,000-$6,000 resale price. Lets use $5,000 as the middle number. Hence the profits would be $4,000 before any costs for lot rent are included.
The investor is new and slightly slow to get going. Hence they take 8 weeks from when they buy the place until they sell it. That means they pay 2 months worth of lot rents. $800 in this example.
$4,000 - $800 leave $3,200 for potential profits.
There will be some marketing costs and some other fees or misc items.
Now, if you take 10% down and then write a note for the balance you will need to cover some part of the $800 in lot rents out of pocket.
1. Get the place sold more quickly.
2. Assume that you need more then $1,000 to do a deal so that you have a buffer for misc costs until the unit is resold
3. Factor in the taxes owed on the profits so you set aside enough to pay the tax bill when it comes due.
Even with all of the above you are going to make money faster then you will in a job.
John
Quote:
On 2004-11-12 00:00, cape21 wrote:
Thanks John .... but I am still curious how one might make a profit on a low priced MH when park lot rent in my area is 250-400 a month. I mean it would not take long at these rates to eat up potentially $1000 in profits.
Roger
[addsig]
I smell fear. That is good, those without fear make stupid mistakes or have lots of experience in that niche. Look at the very parks that you are finding the deals in. Do the people in there paying that high dollar rent all own their MH's outright? Most of them have a payment plus the lot rent. The people you are dealing with are interested in how much down, how much payment per month period. Most of them don't even care about the price. Yes there are more people out there that will buy with financing than there are folks with cash. Remember if you only have $1,000.00 wrapped up in it, if you have to pay 2 months lot rent you are only out another $800.00. If you get an $800.00 downpayment, you aren't out the lot rent. 2 ideas for you.1st, the best source of leads is the seller. They know who had interest but no cash. Also, tax time is a great time to sell to those with bad credit. It is that time of year when they have cash, and believe me, they are ready to spend it, which is part of the reason they are where they are.
Good Luck,
Shawn(OH)
1st Get approval to work in the park. Once you establish yourself with the owner/manager you may be able to negotiate a lower rent while the home is on the market. Over the years,I have done over 300 deals on manufactured homes. Like one of the previous posters stated this is the only home your client can afford to buy. Since you are offering owner financing,this is many times what sells the home.