I am looking to get out of the full time job by investing in MH. I have had a few stick built rentals that have had some LL headaches. I live near Asheville, NC. I read Lonnies two books, worked the financial calculator and became interested in MH investing. I have a fair amount of cash in money market, 403B, and mutual funds.
Options I see:
Buy and hold (renting with a property manager)I can keep full time job until I get enough passive income with property manager, but renters are more transient and destructive than owners.
Lonnie deals (carry note) but need dealer’s license in NC after selling more than two per year. Any legal way around getting license or is it worth it to get license as Part-time investor?
L/O eliminate some renter problems, but I will still probably have to carry the note.
Buying in park and renting the dirt puts control in PM’s hands
I know all investment options have risks, any suggestions?
“Stick built homes”!!! LOL - I love that phrase!!! You HAVE been reading Lonnie’s books. =)
I am a huge Lonnie fan. I have read 3 of his books (he has a rather recent one) a couple times each - he is a genius. And I’ve listened to recorded interviews with him and I talked with him once by phone — that was very informational. I was also going to do Lonnie deals like you mentioned, specifically carrying the notes, but I make alot of money (~100% APY’s) with my existing business which is non-real estate related. So in my case, it’s almost pointless to do anymore little deals.
Lonnie himself basically says after you have enough income from little deals, you need to move onto bigger deals (e.g. from mobile home notes → to carrying mobile home notes while buying the land for cash & leasing it and/or even buying entire trailer parks).
So my question for you is → do you make a lot of passive income already ($100k or more per year) with a business or other form of investment?
If YES, I would pursue bigger deals. Mobile homes & land, entire trailer parks, or other forms of real estate. In my case, I chose “other forms of real estate” because in the extremely urban area I live in there are few mobile homes. But since I know so much about the business, I definitely am not against buying lots for cash if I see any for sale (there are a few around here, just not that many as compared to a more rural area). I just paid cash for a rental property that will give me a 20-25% APY, after all expenses. And I am going to continue to do the same. Lonnie would be proud, as he raves about getting 17%+ on big deals. LOL. And oddly enough, most people are not financially educated enough to even understand that if you keep that mobile home lot OR rental property for 20-30 years…your annual percentage yield will be MUCH, MUCH higher than 20-25% if you continue to increase your rent over time AND eventually cash it out for a much larger amount than you paid for it. Again your APY goes up even more if you 1031 exchange the property and keep increasing your return via another real estate investment. God this is a great business.
If NO, I would pursue doing deals EXACTLY like he describes in his book. I would find $3000 junkers, and sell them for $6000 to $9000 at 12.75% interest. Note: I know a guy who tried varying his system, and he failed badly at the business; note he was buying $10000 homes and selling them for $20000, and his default rate was off the charts since the monthly payments were so much higher. When you’re dealing with low income customers, your default rate will be a little high, but this guy’s default rate was off the charts because he couldn’t copy someone else’s good system. Do it exactly as Lonnie recommends and you’ll almost be guaranteed to find success. I know lots of guys who are doing well at his business, even in my home state of Texas where you have to be a licensed dealer. Anyway when you bring in six-figures, move onto bigger & better deals.
Here are a couple more websites that might be of interest to you:
First, your 403b money should be used in RE or Lonnie deals and it cannot be until you “roll” it over into your own Self Directed IRA, which, unless it’s locked up in TIAA or some other "fixed"annuity and can’t be touched by you until retirement time, could then buy MHs and RE and make loans, etc.
So go ahead and open a “rollover” SDIRA so it’ll be ready for your use in doing Lonnie deals, etc.
And for CEO who’s beyond “little deals” now, I’d suggest you start looking for MH park as that’s probably not too little for you…with MHPs going for up to several million $$$ and you’d maybe find that business to be big enough for you.
Interesting that you were so taken with “stick built” and apparently hadn’t heard it used before except by Lonnie…it’s been a well worn phrase for lots of years with REIs and Agents and builders…so I gather you really are a newbie in the REI world and I commend you for looking in this direction for investment opps.