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…

But, since my partners and I have decided not to buy any additional homes, we’re in the process of shutting down the partnership and dissolving the LLC. That can’t be finished until the final two homes are paid-off, and if that doesn’t happen until next year, we’ll still be dealing with the company maintenance and taxes through 2012.

Instead, we’ve decided to sell the two mortgage notes we’re holding to another investor; this other investor will pay us a reduced price on the remaining value of the mortgage, and will take over “ownership” and oversight of the two homes, and will collect all future payments. The contracts between us and the investor have been signed, and we’re in the process of signing over the titles, getting the appropriate signatures from the buyers, etc. Because the investor lives out-of-town, we’re getting her pictures of the home and info about the park in case she ever has an issue with payments.

While buying and selling mobile homes was a relatively easy business model (especially since my partners did most of the legwork), dealing with mobile home buyers/sellers is not something we enjoyed. And rehabbing mobile homes wasn’t much fun either. So, while we may decide to get back into this business in the future, for the time being, we’re done with mobile home investing.

I’ll post a final analysis of all of our MH financials once this deal is done…

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!

We will be selling this one for $5000, with owner financing. The financing terms are pretty simple:

• No down payment
• 24 monthly payments of $250 each.

The reason we are doing no down payment is that the buyer will have to pay $350 in sales tax at the purchase, so we are trying to limit his additional upfront out-of-pocket expenses.

The total income this property will generate over the life of the loan (2 years) will be $6000 (24 x $250), which is a total profit of about $4300, and a yield/return of about 180%.

One of my partners is with the buyer today getting him approved for the park, and the plan is that the buyer will sign the contracts and move in on November 1.

Along those lines, one of my partners came across a potential deal a couple weeks ago, and we finally got it done today, after a lot of very fun negotiations…

One of my partners originally came across the For Sale listing on Craigslist; the MH was listed at $4000, and the seller seemed desperate to sell, as he was moving out of state. My partner and I went to see the place, and it was in very good condition in a very nice park. It was probably worth $4000, but I certainly didn’t want to pay anything close to full-price for it. The seller was desperate, and we knew that given some time, we’d get a much better than full-price deal on his MH…

We originally offered the guy $3000, and he refused. He said that he was in no hurry to sell (despite his Craigslist ad), and that he wouldn’t go any lower than full price…that he’d rather just take it off the market if he couldn’t get that for it. Okay, we were willing to wait it out; we told him to call us when he was ready to compromise.

Last week, he called us and asked if the $3K offer was still good. We said, “Sorry, we just purchased a few properties, and can only afford to buy this one for $2600 now.” He said no…that he needed $3K or no deal. We told him to call us again when he changed his mind, but that we likely wouldn’t be able to give him that $2600 if he accept it right then.

A couple days later my other partner talked to him, and he asked if we’d still be able to give him $2600. It was obvious that he was getting very desperate to sell (he likely was ready to move and didn’t have any other offers), so we told him no, but we could do $2000. Again, he said he couldn’t come down any lower than the $2600.

A couple days after that, he called again, and asked if we could agree on a price around $2200. This seemed fair to both sides, so we said we’d talk to the park management to make sure they didn’t have a problem with us buying the property and to make sure there was no back rent due. Turns out there was about $1000 in back rent due, and until it was paid, we couldn’t purchase the trailer and leave it on the lot.

So, we talked to the seller and offered to give him $500 to walk away, and then we’d just pay the $1000 back rent to the park. He said that he needed more than $500 to just walk away, and that he’d rather it go into foreclosure before he parted with it for that amount (didn’t make much sense, but whatever). So, again, we told him to call us when he came to his senses.

Well, yesterday he came to his senses. With October rent now due, he owed about $1400 to the park, and they were ready to take him to court. He had already moved to Florida, but called us and asked if we’d still give him $500 to walk away from the trailer, at which point we could pay the $1400 and own it outright. We offered him $200 to walk away, and along with the $300 deposit he’d be getting from the park when his back rent was paid, that would total $500. We weren’t willing to give him any more than that. He finally agreed.

Today, we purchased the MH for $1600 — $1400 to pay off the back rent and $200 to get the seller to walk away. Since the back rent also includes October’s rent, we have 30 days to find a buyer before we owe anything additional on this MH.

My partner already has a potential buyer lined up…we’re meeting with her tomorrow night. She has mentioned that she’s willing to put $700 down and pay about $275 per month, so if it pans out, we’ll make a nice profit on this one literally overnight…