I began following this website about three months ago and became interested in the mobile home deals Lonnie Scruggs was talking about. I purchased his book, Deals on Wheels and noticed an ad in the paper a few days later for a $1,000 manufactured home.
In the book, it states that you should first check with the people running the lot before you buy, just in case they want it moved or have back lot rent due. Talking to the owner, I found that he would accept $500, which was my first offer. The first person to mention a number loses. Well, I wonder if I could have gotten it for less?
I took possession a week later and did not have to move it. This $500 dollar investment had only the sprayer on the kitchen sink working for water. We later found three dead fish in the toilet, but overall it was a very good buy! I have a good friend, Mark that needed some work, and I contracted him to go fishing, do the painting, plumbing, fixing the floor, and a number of other minor repairs.
The net results were that, in three weeks, we had a very nice mobile home with new sink fixtures, new carpet, new water heater and a total of $2,100 invested. I had $1,650 in it and my friend had $450 of his money in the unit.
Just after I purchased the mobile home, I was trying to rent one of my houses and received a call from a nice lady who could not afford the house. We found the mobile home might be just the thing she was looking for, and she could have it paid for in just a few short years. I kept her out of it for two weeks while Mark finished the work. To make a long story shorter, she loved the place, paid me $500 down, and signed a note for $100/month for 48 months.
The numbers work out as follows. I kept the $500 down, leaving me with $1,150 and Mark with $450 invested. For the first 17 months, I will keep $73 cash flow and Mark will get $27 cash flow. The remaining 31 monthly payments will be split $50 each, as Mark also had about 60 hours of time invested. I will get back a total of $2,700 for a 56% return. Mark will make 120% on his $450.
This was a nice little deal that really clicked into place. We received our first $100 check a few days ago, and this will continue this for 47 more months. (And all the work is done, she owns it, and I won’t have tenant problems!)