I was an out-of-work welder. I had some real estate investing experience. I had started learning with Ed Beckley years ago and attended several seminars. I like to learn, and I find creative real estate interesting.
I found out about mobile homes at a real estate investment club meeting. Mobile homes? Who’d want to live in manufactured housing? I made some calls and found several mobiles that seemed very reasonable. One was $1,000, and the other, $2,000. I was broke. I ran an ad to sell the homes for $900 down with NO qualifying. I got about 12-15 calls.
I showed the homes to two people. Actually I told them to go in and look. (I live an hour away.) I had only been in these homes one time, and it was only for a couple of minutes. One had garbage and furniture thrown all over. They both needed work: holes in the floor, bad flooring, filthy fridge, holes in the ceiling and walls, broken windows… Well, you get the idea.
I got one lady who wanted both of them. She only had about $400, so I carried back part of the down. She had to move quick, scary thought. I told her that it would take me a few days to get it into shape. If she wanted to clean it, she could have it tomorrow. She agreed. I talked my mother into loaning me $3,000 to buy these homes.
You can imagine the look on the park manager’s face when she was told by this lady “Hi. We just bought #333 and #334, and we need an application.” The park still owned these homes! Fortunately, the manager is a nice lady and kept my secret.
I went to the office a few hours later and bought the homes. I already had all the notes and paperwork signed by my buyer as well as the $400.
How did I make out? I bought two mobile homes for $3,000. Ad cost: $4 (I didn’t have to borrow this.) I sold each unit for $11,900 (as is). Down payment of $400 cash and a note for the down payment balance of $1,400. Each note is $11,000, 15% interest, 48 months, $306.14 monthly payment. That gives me a positive cash flow of $612 each month.
Now I have $3,000 – $400 (down) = $2,600 in both notes. +282.5% yield. Plus, I have the $1,400 note for part of the down payment. (I know what you’re thinking: He forgot about the $4 ad.)
I have done several deals since these two. My LOWEST yield to date is just over 95%. Life’s tuff some days… [Editor’s Note: Hey, Steve, as Lonnie says, 95% yield is “good enough.”]
I went out of state with a friend to his hometown. My friend had told them about me, so I ended up talking with several businessmen there about mobile homes. Every one of them told me it wouldn’t work there because the mobile homes are too expensive in the area. It took me 1-1/2 hours to find TWENTY mobiles that I could do this with.
The deals are there but you have to have the GUTS to do them. Good Luck!