Got A Call On A Mobile Home
Hi All.
I got a call on a mobile home that is close to where I live. I know nothing about mobile homes. Heres the situation though. 16x80 mobile home. 3bed 2bath, laundry room, central air, remodled thruout. They bought it 4 years ago for $15,800.
They are 2 months behind on payments and they have a balance of $12,000 on a first mortgage. Heres the kicker, they pay $229 a month for lot rent and tax. They pay $410.00 a month on the mortgage thru a local bank. Yes I said $410.00. Its a short term loan, 5 years he thinking. Interest is 17% ouch... He said it appraised for $25,000 a while back because of all the work they did. They must have refi'd to get an appraisal.
The park manager had a contract to sell for them for a $1000 commission. The contract expired today. The manager has not tried to sell it. He showed it once in 3 months. One person offered to buy on land contract but the park does not allow that. Anyone ever heard of that? Seller says park rules state that the owner must buy it for cash and live there. I am not sure I believe that.
Well I am going to look at it but I have no idea what to offer. I dont know what my exit strategy would be if you have to live there. Anyone see any deal to be made here?
Im very new to the the MH business as a Lonnie Scruggs books reader. But I beleive his strategy of sticking to homes that you know for sure you can buy in the 3-7k range and resell in the 5-9k range is solid. I think the home you mention is out of a good price range for you to be able to turn a profit (ie get double what you paid for it by financing it yourself).
[addsig]
I think your right. Thanks.
Quote:
On 2003-12-12 21:36, billfaith wrote:
Hi All.
I got a call on a mobile home that is close to where I live. I know nothing about mobile homes. Heres the situation though. 16x80 mobile home. 3bed 2bath, laundry room, central air, remodled thruout. They bought it 4 years ago for $15,800.
They are 2 months behind on payments and they have a balance of $12,000 on a first mortgage. Heres the kicker, they pay $229 a month for lot rent and tax. They pay $410.00 a month on the mortgage thru a local bank. Yes I said $410.00. Its a short term loan, 5 years he thinking. Interest is 17% ouch... He said it appraised for $25,000 a while back because of all the work they did. They must have refi'd to get an appraisal.
The park manager had a contract to sell for them for a $1000 commission. The contract expired today. The manager has not tried to sell it. He showed it once in 3 months. One person offered to buy on land contract but the park does not allow that. Anyone ever heard of that? Seller says park rules state that the owner must buy it for cash and live there. I am not sure I believe that.
Well I am going to look at it but I have no idea what to offer. I dont know what my exit strategy would be if you have to live there. Anyone see any deal to be made here?
The park manager says that it is against the rules to finance a MH in their park, yet the one you are looking at is currently in default...... hmmmm. However, you need the Park manager on your side or you better not deal on it period. How will you ever get anyone approved to live there without th express approval of the PM. Once that is handled, you need to contact the lender to work with them and maybe get a reduction in payoff or a modification of terms. Remember, when the bank gets it back, they are responsible for the lot rent. that should motivate them a little. I would probably offer the PM some money payable if and only if I gained control of the MH and had an approved (by the PM) buyer, complete with signed docs, moved in.
Good Luck,
Shawn(OH)
Quote:
On 2003-12-13 14:53, dj20742 wrote:
Im very new to the the MH business as a Lonnie Scruggs books reader. But I beleive his strategy of sticking to homes that you know for sure you can buy in the 3-7k range and resell in the 5-9k range is solid. I think the home you mention is out of a good price range for you to be able to turn a profit (ie get double what you paid for it by financing it yourself).
While you are somewhat correct in your observation, this DW may have appraised at 25k which is twice the 12,000.00 payoff. I also believe that depending on the market conditions, that this dw may be had, either thru a short sale, or at the courthouse steps for that 3-7k range. Why not dig through the details even if it ends up being an exercise in futility. There is plenty to be learned here.
Good Luck,
Shawn(OH)
Thanks Shawn
So you think that my first step should be to talk to the park mananger? I think I may just call him and be honest about what i want to do and see what he says. I was thinking about a short sale on this. If I got a short sale and then bought it myself and financed to an end buyer I dont see how that could be a problem. Isnt that what a bank does?
Thanks
Quote:
On 2003-12-14 14:41, billfaith wrote:
Thanks Shawn
So you think that my first step should be to talk to the park mananger? I think I may just call him and be honest about what i want to do and see what he says. I was thinking about a short sale on this. If I got a short sale and then bought it myself and financed to an end buyer I dont see how that could be a problem. Isnt that what a bank does?
Thanks
It makes no sense to do anything unless you have the PM on board. If and only if the PM comes aboard, then talk to the bank and let the negotiations begin. Be sure to have patience. You have 3 shots at this. Short sale, courthouse steps and REO. It may happen quickly, it may happen a year down the road. It may never happen. Don't get fixated on one deal. Make sure it works for you.
Good Luck,
Shawn(OH)
Thanks
I will talk to the manager and see what he says. If he wont work with me I wont spend anymore time on it.
Bill
Shawn
I talked to the park manager and he said he has no problem with me talking to the bank, trying for a short sale and re-selling with owner financing. He said as long as I keep him posted he is fine. He also said he has done this himself but is getting too old to deal with these kinds of things.
My next problem is that the owner owes $12k but was looking to get a little moving money like 1k or so. If I got a short from the bank for say 6k or so how could I get them their 1k without the bank getting upset?
Lastly how the heck would I know what I could sell this place for with owner financing? I dont know how to figure a value on these and I dont know how many people in the area are looking for mh's. Its a real nice place but I dont know if that matters or not. THanks
Quote:
On 2003-12-15 09:23, billfaith wrote:
Shawn
I talked to the park manager and he said he has no problem with me talking to the bank, trying for a short sale and re-selling with owner financing. He said as long as I keep him posted he is fine. He also said he has done this himself but is getting too old to deal with these kinds of things.
Next, I would ask for 3 months free lot rent , once you get control, to help protect you from unneccessary costs.
My next problem is that the owner owes $12k but was looking to get a little moving money like 1k or so. If I got a short from the bank for say 6k or so how could I get them their 1k without the bank getting upset?
First, if the buyer,PM, and the buyer aren't on board, you have air. In specific answer to your question, you may offer to pay the seller for a specific service, like cleang or repairing another of your properties, or you may buy his TV for $1,000.00 or something of that nature. It may not be in conjunction with the sale of the property, even if it is. The bank will get angry, and rightfully so. They are giving you a discount to help them out with a seller that isn't going to pay them. They trusted him and he screwed them. Think of it like this. You lend someone $2000.00. They don't pay and someone offers to give you $1,000.00 to walk away from the problem. They turn around and give your deadbeat $200.00 as a reward. That $200.00 should have been yours.
BTW, do not give the seller 1 penny until they have moved and all the title work is done.
Lastly how the heck would I know what I could sell this place for with owner financing? I dont know how to figure a value on these and I dont know how many people in the area are looking for mh's. Its a real nice place but I dont know if that matters or not. THanks
Check with a local MH dealer to see what the home is worth. Contact another bank to get the retail value, the amount they would lend for that particular make and model. That is your selling price. Ask the MH dealeer how much they would write a check for for this MH, and include the cost to move it. This is the maximum you should spend on it. Also check www.NADA.com for values. Again banks, insurance companies, and MH sellers, will have access to this information.
Good luck,
Shawn(OH)
Thanks Shawn
The park manager has been doing this for 25 years and I got some great insight from him. He said that if he was going to buy it he would pay no more than $7500. He said its worth in the high teens buy should sell quicker for around 14k. He also said he has someone interested in purchasing this place on a land contract for 14k. He will not let the seller sell on a land contract because of their financial problems but he said I could and that he would even help me with the paperwork.
I guess the only thing I would need to do now is see if the bank is willing to discount. I made the offer to the seller and am awaiting a response. Thanks Shawn