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Investing in Mobile Homes: My First Two "Lonnie Deals"

by Jackie Lange, Dallas, TX   

"Lonnie Deals" seemed to be the hot topic on the Creative Real Estate Online Main Real Estate Forum, so I thought I would order Lonnie Scruggs' book Deals On Wheels and check out mobile home investing. For just $35, what did I have to lose?

While waiting for the book, I decided to visit a few mobile home parks. Much to my surprise, there was a wide variety of parks. Some were downright junky, and I could see how the term "trailer trash" may have come about.

However, some parks had a country club environment. They had tennis courts, lakes with ducks, swimming pools, and jogging trails. All the homes in these parks had well-manicured lawns, decks, and covered parking.

At each of the parks, I visited with the managers and told them I would be interested in buying homes if I could get them at a good price. I told them my intention would be to keep the home at their park, renovate the home if necessary, and resell with owner financing. Even though I didn't know the details of how I was going to do this just yet, I had confidence that Lonnie's book would teach me everything I needed to know.

A few days later, Deals on Wheels arrived, and I read the whole book that afternoon. I was armed and dangerous now! I scanned the weekly newspapers and found a mobile home for $2,000. I called to get the details; the owners sounded anxious to sell fast.

The next day, I met the owners to look at the home. When I arrived, the first thing I noticed was a refrigerator sitting outside the home. When I stepped out of my car, I quickly realized why it was outside--the refrigerator smelled like a big, dead animal.

Before I even got inside the home, the owners lowered the price to $1,800. I figured it must be a real dump, but I was obviously dealing with motivated sellers!

The mobile home had many of the defects that Lonnie warned about in his book, but it really wasn't too bad. Soft floors around windows and toilets seemed to be the biggest problem. It was a fairly nice park, so I agreed to purchase the home for $1,500--subject to me getting clear title. We agreed to meet the next day and finalize the transaction.

The next day, I met with the park manager and discovered that the lot rent was three months behind. The manager told me the home had been repossessed by a dealer three months ago, and my seller bought it from the dealer.

My new strategy was to just get the seller to deduct the lot rent from my purchase price, and I would go ahead with the deal. But, when I met the seller, he informed me that he did not have a title. He was waiting to get it from the dealer. The dealer told me the home was tied up in a legal mess, and they didn't know when they would have the title.

I decided to PASS!

This one didn't work out, but because I read Lonnie's book, I knew what to look for, what questions to ask, and which deals to pass on. I didn't make any money, but Lonnie saved me a bundle!

The next day, I got a call from one of the managers at a really nice park I had visited. This park also sells new mobile homes. They had a client who wanted to buy a new home, but his only down payment was the old mobile home he had at another park. The home exceeded the age limit they were willing to buy. It was a 1979. The owner needed $2,700 for the down payment on his new mobile home.

The 1979 Melody home was only a 12 x 70, two-bedroom, one-bath but it was in excellent condition, and there was a large storage shed on the large lot. It was in a well-located, nice park.

The manager told me the lot rent was current, and the home could stay at the park. She thought it would sell fast because they have a lot of calls from people wanting to move to the area. The manager even offered to run a credit check on the potential buyer for me, since they had to pass "her" test, too.

At 2:00 that afternoon, I bought the home for $2,700. I put an "Owner Will Finance" Low down, etc. sign in the window. Later that day, I got a call from one of the neighbors at the mobile home park. Her brother was looking for a home and wanted to see it the next morning at 7:00.

When we met at the house, I was surprised to find out the potential buyer could not speak a word of English. (Lonnie didn't cover this one in his book.) Luckily, his 9-year-old son was there to translate for us.

He took a quick look at the house and decided it was perfect. He agreed to purchase the home for $5,900 with $1,000 cash as a down payment. Since I didn't charge interest his payments would be $245 per month for 20 months.

The buyer, his son, and I filled out the application for the park and the purchase agreement. By noon, he was approved by the park, and in less than 24 hours I had closed on my first "Lonnie Deal."

Thanks Lonnie! If I had not read your book, I could have gotten into a serious mess on the first deal. But because you were so generous with sharing your knowledge, I was able to expand my investing avenues and make a "good enough" profit on the second deal.

 
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