I just wanted to take a few minutes to recap our results with our mobile home deals:

In all, we purchased 5 mobile homes over about 5 months. I had two partners, who admittedly did most of the field work (We had just had a baby, so I spent most of the time at home working on the business side of things). So, while I can’t comment too much on the effort and difficulty of the transactions, I think it’s safe to say that the work was easier than flipping homes (mostly because there was less rehab involved), albeit with the added frustration of dealing with very low income tenants/buyers.

Our first mobile home deal was the only real estate deal I’ve ever done where I lost money. This was unfortunate, but gave me the perspective I needed to realize that I didn’t want to be the mobile home business (at least not at the level of buying/selling individual homes). Luckily, the rest of our transactions were profitable, and over the course of the past 9 months or so, we were able to double our very small investment into this business.

Here is a detailed breakdown of our financial results, not including overhead expenses:

As always, all our results — including these — can be found on our Results To Date page…

All-in-all, I would definitely recommend flipping mobile homes (Lonnie Deals) to new investors who are looking for a relatively inexpensive way to get their feet wet in real estate investing. Not only do many of the principles of wholesaling and flipping houses apply to Lonnie Deals, but for an energetic investor with a little cash to invest, mobile home investing is a great way to build up the bank account and move up to bigger and better aspect of RE investing.

Again, just my opinion…

Mobile Home #1

Our very first mobile home purchase took a turn for the worse last month when our buyer (who we were selling to with financing and had been in the home since October) decided to move out, without giving any notice. We didn’t receive a January mortgage payment, and upon investigating, we found the MH had been abandoned and left in pretty rough condition (actually, they bought it in rough condition, so it wasn’t much worse).

We had realized after we originally purchased that home that we probably didn’t want to be taking on mobile homes that required too much work, and therefore decided that we didn’t want spend a lot of time/energy rehabbing this one once the buyers left. So, we bit the bullet and sold the home to a cash buyer at a low price.

We had purchased the home for $2000, put in $150 in rehab and another $125 in transfer costs and taxes. We had received $1400 in down-payment and loan payments from the original buyer, plus another $750 from the cash buyer who ultimately took it off our hands. After all was said and done, we lost $123.47 on this deal…the first time we’ve ever lost money on a deal! But, it was a good learning experience and I’d rather take the $100 loss than have to deal with that run-down home…

Mobile Home #2

We’ve had our buyers in this home since October, and they are fantastic. They pay their loan payment on-time every month (before the 1st even!), and they’ve been a pleasure to work with in all respects. They still have 14 payments left on their mortgage, and the way things are going, I’m pretty confident they’ll get it paid off. They had been talking about paying off the loan with their tax refund this month, but I don’t think that’s going to happen.

We’re into this property for about $1400 after all costs and expenses, and we expect that if these buyers pay off the note on-schedule, we should make about $2500 in profit, for a bit more than 100% return in 18 months.

Mobile Home #3

These buyers have only been in the home for two months, but have made both their payments on schedule and we haven’t had any issues with them. They have 12 more loan payments before their note is paid off and they own the home.

We’re into this property for about $1300 after purchase costs, rehab, paying off back lot-rent, etc. And we expect that if these buyers pay off the note on-schedule, we should make about $2600 in profit, for nearly a 200% return in just over a year. Not too shabby…

Mobile Home #4

We purchased this home for $1500, put in about $420 in rehab and tax payments, and then turned around and sold it to a cash buyer for $3500. In the week that we held that property, we made $1579.29 in profit on a $1500 purchase, for greater than 100% return in one week.

Mobile Home #5

We purchased this mobile home a few weeks ago for $500 and put in $560 in back lot-rent and rehab costs. We quickly found a buyer who needed financing, and sold it for $3500 ($500 down-payment and $3000 mortgage to be paid over 13 months).

Projected profit on this one (assuming the buyers pay off the mortgage on-schedule) is $2650, for a 250% return in just over a year.

So, overall, I think we’re doing pretty well with the mobile homes. MH #1 was clearly bad purchase (in retrospect), and who knows what adventures we’ll have with the remaining three buyers who we are financing the purchases for; but from a purely financial standpoint, we’ve been able to buy and sell these homes for substantial profit margins, and (so far), the work required to purchase, rehab and resell the homes has been pretty minimal, especially compared to typical single family homes.

House #1: The Corn House

According to the credit repair company we have them set up with, the lease-purchase tenants may be close to qualifying for an FHA loan. I don’t know if that’s actually the case, but we plan to have them check in with our mortgage broker first thing next week, and have their credit reports and FICO scores pulled.

Would love to get the house sold to them in the next couple months…

House #12: The Mini House

We have every reason to believe this one should close next Friday. The buyer finished her inspection, and has requested a few minor repairs. Her mortgage broker has told us that she is already through underwriting, and that they are just waiting for the appraisal on the house. While I would normally be a little nervous about the appraisal, the broker has informed us that they service all loans in-house, and therefore have their own appraisers. So, we don’t have to worry about any weird HVCC rules or weird FHA guidelines that could skew the appraisal in the wrong direction.

After four contracts on this one, I’m ready to get this thing closed, and I’m cautiously optimistic it will happen next week…

House #13: The Poor House

We’ve been told by an agent who took buyers to this property last week that we should be getting an offer. Apparently, the buyers’ had a death in the family a day or two after viewing the property, and have been out of town since. Also apparently (who really knows), they have called their agent a couple times to let her know they are very interested in submitting an offer when they return.

Well, they’re supposed to be back today, so we’ll see if we get an offer this weekend. If not, we’ll start doing some heavy marketing next week…

House #14: The Pine House

We replaced the roof on this one already, and would love to start some serious rehab (this will be a huge project), but because we weren’t positive we’d ever own it, we waited until we closed on the purchase before we ordered all the new windows for the house. Because we need the windows before we can replace all the siding, and because we need the new siding before we can do the mold remediation, and because we need the mold remediated before we can do anything else on the interior, we really have no choice but to put off the bulk of rehab until the windows come in.

Hopefully next week…

House #15: The Neighbor House

It doesn’t look like we have much traction trying to wholesale this property (though we haven’t really tried other than posting here on the blog and sending a couple emails to investors we know), and are still trying to figure out the best strategy to pursue here. Right now I’m leaning towards doing a rehab, waiting 90 days to sell, and making a nice profit. While I’d still consider wholesaling for a quick return, waiting a couple months doesn’t seem like a bad option given how easy this one will be to fix up and sell, and how much more we’ll make by rehabbing then we would be wholesaling.

I’ll make a final decision next week on what to do with this one…

House #16: The Probate House

As I mentioned yesterday, we’re in the middle of some reasonable renovations on this house, though we won’t be doing a full remodel. The bulk of the work has been on the exterior, and with all the rain we’ve received the past couple weeks, things have gone a bit more slowly than I was hoping. That said, I expect this one to be completed early next week, and we’ll start marketing it.

My wife wants to initially list it considerably higher than I want to, mostly because I feel like we should under-price it given that we didn’t do a full remodel. But, my wife is likely correct that even at her higher price, the new owner will be getting a great deal given the location and the size of the house. She’s usually right about most things, so I’ll probably relent (or just try to get her down a bit).

My goal on this one is a quick sale…the house is about 30 minutes from where we (or our project manager) lives, so going back and forth won’t be fun for very long…

Staging

Because my wife does most of her staging on contingency (meaning she only gets paid if the property sells while staged), we’re always happy when a staging project gets sold.

The investor who owns the Staging #2 project has indicated that he has gotten a lot of good feedback on the property and is currently negotiating a contract. Given the numbers he mentioned to me, I’m not sure if he and the buyer will be able to come together on price, but we’d love for him to make a relatively quick sale on this property.

The same investor owns the Staging #3 project, and I’m thrilled to say that that one is currently under contract and scheduled to close in two weeks. Not only will getting paid on this job be nice, but it will be nice to get the staging furniture back to use on another project.

Mobile Homes

I’ll have more to say in a future post, but there is a good bit going on with the mobile home business.

The buyers for MH #1 didn’t pay January rent, so we may have to start repossession (they still have a couple days before we kick them out).

The buyers for MH #2 and MH #3 are still paying on time.

The buyer for MH #4 bounced his down-payment check, and quietly agreed to leave. Looks like we’re going to turn around and sell this one for cash for a quick profit.

We have MH #5 purchased…more on that next week.

That’s it…have a great weekend!

House #1: The Corn House

Nothing much new with The Corn House. The lease-purchase tenants are consistently paying their rent, and their escrow account (what they pay each month towards their purchase) is up to about $7000. When they are able to buy the house, this will go towards their purchase, and if they never are able to buy the house, this will go right into our pocket.

Currently, we’re thinking they should be able to close before the tax credit expires next June. They’re working on their credit, and so far, doing everything necessary to ensure that they’ll be able to qualify for an FHA loan in the near future.

House #12: The Mini House

This one is still under contract and scheduled to sell by the end of this month. That said, the broker and buyer have been dragging out the process, and while we’ve been told numerous times that the appraisal is going to be “tomorrow,” we’ve yet to see the appraisal done.

Because we’ve given this buyer about 5 weeks to get the purchase completed, we’re not going to extend this contract if they can’t close by the first week of the new year. We’ll happily take their deposit, and start marketing this property to all the other agents that have contacted us over the past few weeks.

House #13: The Poor House

This one is still under contract to sell. The buyer and broker were aggressively trying to get this one closed last week, but that didn’t happen. That said, the appraisal has been completed (we haven’t gotten the results yet), and as far as we know, everything is on-schedule to close in the next week or so.

I assume that we’ll hear about the appraisal by tomorrow, and if there are no issues, we’ll hopefully schedule the closing before the end of the year. If everything goes as scheduled, this will be by-far the easiest deal we’ve ever done.

House #14: The Pine House

We were supposed to close on the purchase of this one last week, but not-surprisingly, the bank couldn’t get everything done in time. We don’t have a new closing scheduled yet, but I imagine it will be in the next week or two.

In the meantime, we’re continuing getting bids on all the work, and trying to figure out how we’ll make our budget…

I’ll post BEFORE pics tomorrow…

House #15: The Neighbor House

The contracts are officially signed for this one, and while we’re scheduled to close on December 30, I have a feeling we won’t quite make that date — again, I don’t imagine the bank will be able to get all the title work and paperwork done by then.

I’ll post BEFORE pics tomorrow…

Mobile Homes

Mobile Homes #1, #2, and #3 are all purchased, and we have received all payments from the buyers (not necessarily on-time, but they’ve paid the late fees!).

Mobile Home #4 was cleaned out today — there was a lot of junk left over from the previous tenant. We’ll start marketing it next week, and expect that we shouldn’t have too much trouble finding a buyer. The mobile home park has been very generous about allowing us to not pay rent for a month or two while we try to sell the home.

Staging

My wife is planning to start — and finish — Staging Project #3 tomorrow. I’ll post pictures when we’re complete…

We will be moving the furniture out of The Poor House for this staging project, so hopefully that house will close without any problems. We’d hate to have to restage the house if the deal falls through!

Anyway, I think it’s been about a month since I’ve done a general update on all the properties and business activities, and with everything going on, I feel like I’m falling behind by only posting on one topic per day. So, here’s an update on where each of the properties stands, and what is going on with the business:

House #1: The Corn House

We have our lease-purchase buyers working with our credit repair company, and I’m hopeful that by the time their purchase option expires (February 2010), they’ll have their credit to the point where they will be able to purchase the property.

The husband has been very diligent about keeping in touch with the credit company, doing his part and working hard to get his creditors paid off. And the credit company is doing their job, appealing all the the issues that have come up on the credit report, and giving our buyers good advice on where to focus their payments and their efforts.

I still have no idea if these buyers will ever be able to actually purchase the property, but I know they want to and are working hard to get there.

House #6: The Red Garage House

This property has been the bane of my existence the past several months. We’ve already received four offers, had two contracts, have gotten four appraisals, done two inspections, and we just can’t seem to sell this thing! Unfortunately, both buyers who had contracts couldn’t get their financing done, so the house is still sitting, and every day it sits on the market, it starts to look less and less desirable to buyers who wonder what’s wrong with it.

We actually just dropped the price a bit (to $107,500), and did some heavy marketing over the weekend, and we’re seeing a few potential buyers coming to look at it so far this week. So, hopefully we’ll find someone interested very soon. If not, I’m planning to greatly reduce the price in a week or two, to the point where we can quickly move this one. I hate having cash and credit tied up for more than 4-5 months at a time, and this one just hit six months.

House #8: The 16-Bid House

This one is under contract, and we have a closing scheduled for Friday afternoon. The buyers have until midnight tonight to do their inspections, but it doesn’t look like they plan to actually do one. I still don’t know if they’re planning to use the house as their primary residence or if they plan to hold it as a rental, but either way, I think they’re getting a great deal, and I’ll be happy to get this one off the books at the end of this week.

House #11: The Sunglasses House

The rehab on this one is pretty much complete (final pictures/video coming soon), and now we’re just dealing with the final inspections. Last week, we failed both the final plumbing and final HVAC inspections. Of course, both our plumber and HVAC guy disagreed with the reasons for the failures; but ultimately, the inspectors are going to get what they want, so both companies came back out to make the required changed.

As of today, we’ve now passed all of our rough inspections, and have passed our final plumbing and final electrical. Our HVAC guys should be finishing up their work this week (they’re waiting for a part to come in), and hopefully we’ll get signed off on the final HVAC inspection by the end of the week. That just leaves our Certificate of Occupancy (CO), which is the final overall inspection, at which point we’ll officially be done.

This house is being sold to my brother and his fiancee, and because it’s an FHA loan, we can’t close until after we have owned it for 90 days. My brother’s lender has been able to push most of the preliminary loan work through already, and thinks that they could possibly close within 1-5 days of hitting the 90-day mark! In fact, we’ve already had two appraisals (both came back well-above the purchase price), and because we will have an CO, we don’t need an FHA inspection.

It’s possible we could close on the sale of this property as early as mid-next-week…but anytime in September would be fantastic…

House #12: The Mini House

We just got a final contract from the couple who put in an offer on this house last month. They were forced to wait until this month to start the financing process, due to the FHA 90-Day Rule, so we didn’t formally accept their offer last month, and hadn’t spoken with them in a few weeks. We can’t formally sign the contract until we hit Day 91 (end of September), but we’ve verbally accepted, and assuming no financing or appraisal issues come up, I think we have our buyers!

The buyer’s lender thinks they could be ready to close in early October, so this could be another property we get sold in the next few weeks…

House #13: The Poor House

We’re schedule to close on the purchase of this one next week, and are just starting to put together our budget and our contractor list. It looks like this is going to be a more expensive project than we had anticipated, as we finally figured out the source of all the mold in the basement. Apparently, one corner of the basement has some serious water-proofing issues that we’ll need to rectify before we can start on our cosmetic renovations.

We got our water-proofing company out to give us a quote on the work, and he came in at around $7K for what he recommended we do. I very much trust their opinion, but for this price, we needed to get a few more quotes, so we called a couple more water-proofing companies. We’ll get three more bids this week, and hopefully we can get that price down a good bit. Unfortunately, I don’t know much about water-proofing, so it’s going to be a tough area for us to negotiate.

In addition to a full cosmetic makeover on the interior, we’ll also be replacing all the siding and the roof on exterior of this house, so overall this is going to be a big project. This rehab will likely come in around $50K, but we’re picking up the house for a great price, so hopefully we’ll still be able to make a decent profit.

Mobile Home #1

We’re meeting with the mobile home (MH) buyers for MH #1 this Friday to get all the contracts signed, collect the rest of the down-payment and then let them move into the property. This first sale was almost too easy, but we’ll see what happens. Worst case, they don’t pay their mortgage payments and we need to repossess, but with their $500 down-payment, we’ve already collected 25% of our purchase price back.

After doing some further research, we’ve realized that in order to buy and sell MHs in Georgia, we need a dealer/broker license. This is going to take a couple weeks to get and is going to cost us $200, but if we’re going to make this a long-term business, we should be following the rules. Of course, this now brings up the issue of having to collect sales tax from the buyers, and creates a whole lot more paperwork for the business, but I guess that comes with the territory.

Anyway, that’s it for today…more tomorrow, unless the baby decides he ready to join us…

Well, it appears we’ve done our first deal already! One of our partners found a MH listed for sale on the website of a local bank. The MH was a foreclosure and the bank was asking $5000. My partner looked at it, and while we still have very little idea of what constitutes a good deal, his gut told him that we could probably resell it for more than we could buy it for.

We made an offer to the bank for $1700 in cash. The bank let us know that they had multiple offers already, but that we were the only one’s to offer cash (the rest needed financing). Given that, they were willing to settle for $2500. My partner kept negotiating, and ultimately we were able to get them to agree to a $2000 purchase price if we brought them a check within 48 hours.

Unlike typical real estate, MHs don’t generally sell with the underlying land, so a typical MH sale is more like buying/selling a car than it is like buying/selling a house. In fact, it’s almost exactly like buying/selling a car — you sign a Bill of Sale, exchange money for the Title, and then register the Title at the DMV or local courthouse (depending on your state).

As soon as the bank told us they had accepted our offer, I threw an ad up on Craigslist to see if I could get some interest. The home needed some work, so we decided to try to sell it as-is (to someone with some handyman skills) at a relatively low price; if that didn’t work, we’d do some rehab and list it a little bit higher. I offered the home in AS-IS condition for $4600, with $500 down and $250 per month.

Within a few hours we received several calls from interested buyers. We sent them to the property (there was no lock on the door), and told them to take a look and let us know if they were interested. Just in case it was necessary, we called a few handymen and had them meet us at the property to give us bids on the rehab work (some plumbing, roof repair, subfloor repair, etc). The estimates on the rehab were in the $400-600 range, and likely could have been done in a day or two. Luckily, that wasn’t necessary.

By the next morning, we had three seriously interested buyers. One was out of state, and the logistics of getting him approved by the park manager and getting the paperwork signed would have been difficult. The next buyer offered full price, but needed to get his wife to agree to the purchase before he would commit to moving forward. And the third buyer offered $4100, with a $500 down-payment ($200 today and the other $300 next week when we signed the papers). And they were perfectly okay with the condition of the property, as they were willing to put in the work to fix it up themselves.

Since we didn’t yet own the MH (we hadn’t wired the funds yet), we were perfectly happy to hold off on the second half of the deposit, as we couldn’t let them move in yet anyway. So, we collected the $200, had them fill out an application with the mobile home park, and signed some preliminary agreements. We’ll meet next week (after we have the Title) to collect the rest of the down-payment, sign the contracts, and let them move in.

If the deal goes through as expected, we will have purchased the home for $2000, sold it for $4100 with $500 down and financing the other $3600 @ $250 per month for 16 months. This will give us our principle back in 6 months, a total profit of about $2500 and a yield of over 175%.

Not bad for a first deal that took about 2 hours worth of work…