Starting MH investing...w/ no cash?

My thoughts on REI early on was based on the following avenues of investing…

Birddog/Wholesaler - no cash/no credit

Rehabber - can deal with lenders, get repairs done, market for sale

Mobile Homes - Creating Notes by buying low with all cash for high return %ages

BUT! In my situation I don’t necessarily have cash sitting in my checking account, but I do have good credit and can get unsecured loans for like $10k. I can see that doing mobile home deals can return a higher yield and return on my money than SFHs.

Is it feasible to use my borrowed cash to buy MHs cheap then create notes with payments coming in and claim the payments as income to afford to get MORE unsecured loans or lines of credit to buy more properties?

In example I got a loan recently for $8k @ 8.4% for 36 months with payments of $254/mo. If I bought a MH for $2500, fixed it up and had $3500 into it and sold it at $8k @ 12% for 36 months, not including any down payment would this not more than pay for my $8k loan and still have $4500 to do another deal with?

Any ideas on if this would later kill me? or thoughts on how to improve this?


I know you posted this some time ago but I thought I would weigh in.

It looks like we are in a similar situation. I have great credit around 820 but due to many lay offs I now find myself stuck in a low paying job. Some months I fall short of money for bills. I have a relative that helps out in those months in exchange for hard yard labor and fix up around the house. I’m appreciative though.

I have looked at buying MH’s verses SFH. I just haven’t been able to commit to doing it. I can get access to some cash but I would have to generate a good monthly return and prove it or the cash won’t be available.

In reference to your question: If it were me I would try to generate enough monthly income to fund my MH investing as a business and create a personal monthly income. That would allow me to qualify for business loans or grants and personal loans.

I hope this helps.

Some times I want it all. If I begin buying MH’s I need to, almost immediately, buy enough to replace my job income and be able to get health insurance. I have not ruled out trying to buy a MH Park.

Maybe you can help me with the numbers on buying MH units. I’m running the numbers now. But, I can’t get the numbers to work. Maybe you can help me with that.

It looks like from each of your sales the money received would have to go to buying and rehabing your next home and there wouldn’t be enough for an income for some time.

Do you do all your own rehabing?
Are you having to pay lot rent while rahabing?
Are you figuring the cost of rehabing expenses like lot rent, loan payments and utilities into your overall costs?
Now this purchase you made was done some time ago how has it gone?

I ran your numbers in your posting. I couldn’t come up the same amounts. I didn’t know if you paid lot rents or any utilities during rehabing either.

I think you might be moving funds around and not actually creating real income. On paper it looks like income but the little bit of information you provided in the posting I don’t see much income. The banks has a good with kind of a hidden payment garranty.

But of course it may be like the saying: Which would you want, a $1 million now or a penny a today, double it each day for 30 days. A little now to get a lit later. The second will give you far more than a million dollars.

Name: ARamirez
Last Active: September 16, 2005, 07:23:10 PM

Don’t hold your breath for an answer on this one from Mr. Ramirez.

If you start buying rentals (MH or otherwise), you’re not immediately going to have enough extra money coming in to generate the income you desire. It will take time and volume.
How do you plan to start buying MHs? Is your plan contingent on getting a better job with extra income to be able to reach your goals?
I think “Lonnie” deals sound interesting. Just haven’t tried that yet.

When disposable income is nil every cent has to be maximized.

How do you plan to start buying MHs? I can get access to a little cash through a relative. However, I will have to be accountable and be able to show the amount I get will very quickly replace my current income plus make me no longer reliant on that person. It will be interest free with the ability to pay back the principal. The relative has come through for me on the months my income doesn’t cover bills. Once I get the loan there will not be any funds from this relative to cover my bills on the months I run short. Note: I fore saw this bad economy back in 1999. I was able to clear all my debt except my mortgage but managed to refinance at 5.5%. So I live a very basic life.

Is your plan contingent on getting a better job with extra income to be able to reach your goals? A better job today is non-existent. I have always had problems working more than one job. I don’t know why because I can multi task far better than most. I’ve also been able to make my employers bottom line grow by millions but I can’t seem to make my bottom line grow by millions.

When I pool money from what ever source it must get me out of this hourly job, cover health insurance and provide enough disposable income to allow me to continue growing my venture. I don’t want to leave one job where I’m stuck and broke for another.

This move into MH’s or MH parks or apartments must provide enough income to allow me to hire a manager after a short time to manage that project while I move on to pick up another. I have business turn around experience so I plan to work within a major investment project for 18 to 24 months then turn it over to a manager or management company and move on to the next investment project.

The first investment needs to provide for all this, then the following investments can produce a smaller return.

I am trying to come up with the money to buy Lonnie Scruggs’ book.

I was hoping MH investors in other parts of the country would share more detailed information. I’m in Missouri and don’t really think I’d be a competitor. When I reach about $80K to $90K a year in personal income I will focus on making my current investments better and move them to out compete the local competition.

Lonnie Deals are awesome! I have never done any, but I have read all of his books several times. I base several of my major investment philosophies off what he does.

I have actually spoken to Lonnie before, and he said I shouldn’t do mobile home deals … as I need to focus on bigger stuff, ie mobile home parks or something else, since I already have a six-figure income earning machine (a separate company).

In his books he basically teaches - make as much money as you can with high yielding “short term” assets like mobile home notes, and funnel the profits into lower but still good yielding “long term” assets. Rinse & repeat, rinse & repeat. Sooner or later, you will be a rich man.

He basically made money with mobile home notes, and bought mobile home lots with his earnings, and sold the mobile homes on the land too. Pretty damn good idea. He also did standard rental homes, single family notes, hard money loans and something else if I recall. Apparently his daughter became a millionaire (earlier in life) because of what she learned from him.

And I AM doing something similar now by paying cash - way, way, way below market value - for rental homes in Dallas, Texas with my excess earnings. I make as much money as I can with my primary investment / business, which has similar yields to mobile home notes, and funnel the profits back into my rental homes which make 20-35% pear year. It’s a no lose deal if done right.

Sooner or later I will move on from lower and middle income housing into something bigger like commercial deals, but right now there is too great of an opportunity to pass up in the single family home housing market.

Lonnie is a real estate idol of mine.

justin0419: (sorry this got a lot longer than I thought)

The Dallas area is significantly larger than the KC area. About two years ago I did a real estate market study in a subburb town called Grandview (south side of KC). There were 65 homes that had gone unsold for more than 1 year. All were rehabs. Some had some real nice work done. Problem was the entire real estate market in KC was already tanking. This town was once a cow town until in the late 70’s to mid 80’s. The feds did block busting. Real low interest rate mortgages to minorities. The town is now a subburban getto with high crime and bad schools. There just wasn’t any buyers. At the time I was working for a builder. My business assessment for him showed that if the job market didn’t improve to also include greater job security then not much was going to sell especially a new homes.

So rehabbing in KC is not a very good venture.

It will be another 3 to 4 years before KC’s real estate market will return. Most of the Rehabers I know have quit. Over the past 9 months homes under $100K have begun selling but nothing near what it would take to create a good income for a rehabber.

I’ve studied the R/E mkt for a couple of years now. I’m definitely not an expert but I have found SFH are very high risk. Apartment complexes are the safest in the R/E industry. The risk is spread amoung a large number of renters significantly reducing the risk.

I found an apartment complex in southern FL that appraised in 2007 for just under $12MM ($11.8 I think). The owner dropped the price last year to just under $7MM. I read some bloggs on the complex and it looks like the current owner has turned it around and the current renters are mostly happy.

I did a quick look at the Florida R/E mkt and have come to the conclusion it will rebound in another 2 1/2 to 3 years if our gov’t continues to correct itself (reference 2 Nov 10’s elections). My brother lives near the complex and he said the oil spill didn’t reach them so the beaches are in good condition. Included in my plan was for me to reside on complex for 6 to 9 months and put in place some special programs that will attract prospects and tenants from competitors to fill the complex.

I have a pretty good sales and marketing background I feel I can significanlty reduce the vacancy rate.

I was going to try to find investors and buy the complex. I have my project plan about 80% completed. I’ve set it aside while I research the MH industry. I read several years ago where MH Park/land leasing is in the top 5 ways to become a millionaire. Lower maintenance expenses with land. (just landscape care, snow removal)

I am impressed with your methods. Taking and tweaking a plan that works to form your own system is great.

My past experience is in product development, retail mgmt & sales team development, executive mgmt and project mgmt in the area of retail and government supply center development.

Commercial R/E in KC has tanked as well. What’s strange is that some of the bigger commercial developers and big box retailers are still building new commercial malls. This has added to the millions of square feet of retail and office space sitting empty. A lot of that space is brand new never been rented yet these guys are building new sites.

In reference to you using cash to buy below mkt. I’ve got the same idea, if I can. That is why I refocused on MH Parks and Apartment complexes. I thought if I could pick up some MH’s to generate cash flow I could turn the little bit of cash I can get from a relative into income so I could leave my current job and grow that cash so I could stair step up to MH parks then apartments.

It just seems with SFH’s it will still take a lot of money to get a couple of hundred dollars per home. Equity building would be the offset however, with the market so bad I think equity building could take a lot of years. Now, Dallas being so large maybe they will recover faster. I have seen reports where in south Texas the bad R/E mkt has not hit them as hard. Dallas may be the same, I don’t know.

But, if you can take the risk and have enough cash flow to cover the vacancies and you’re willing to wait I can see how it will pay off when you sell 20 or 30 homes to buy a $1/2MM to $1MM Repo and turn it.

Keep in mind though something I came across the other day. Buyers at all levels are asking for home plans with smaller floor plans (around 1700sf). Higher SF could take longer to sell. Higher SF means higher utilities and up keep.

Another thing that might help sell or even attract renters. Up grade a few things that will save the renters/buyers money. Put in tankless water heaters or a 95% efficient heaters. I thought about doing it in MH’s. It could attract prospects away from the rehabbers who use cheap water heaters and furnances. Since I plan to resell the MH’s I wanted to go direct to the manufacture and buy a few in bulk and get them at a good price saving rehab dollars.

A good thing I learned in college was to differenciate my product as a selling point and upgrading with tankless water heaters and a 95% efficient furnace can help do that. Energy star dish washers and other appliances help as well but tankless water heaters and 95% furnace is something the other R/E investors won’t do.

Talk with you later.

Frank Van Dyne
Grain Valley, MO


Not sure why you would be looking at Grandview for RE. You should be looking at Leawood, Overland Park, Lenexa, and Olathe. These are more affluent areas and they are wayyyyyyyyyyyyyyyyyy overbuilt. I work for Stanley Steemer and I go into homes that are being sold or were just bought foreclosures from banks every single day I work. In fact about half the homes I go into the residents are either selling or thinking of selling within the next 6 months. You can go online and find decent deals so if you find deals that aren’t listed I’m sure they’d be steals. Granted Johnson Count has taken a bit of a hit because businesses aren’t hiring as much and Sprint has been laying off people for years. But, I personally don’t think it’s any worse here than any other part of the country. Plus JoCo is consistently in the top 10 counties to live in the US. So snatch them up now while they are cheap and have room for negotiations. There are a bunch of 350k+ homes that nobody has bought, couldn’t afford to complete, or were foreclosed on and if you can get these for around 200k or less and turn them around for an easy 250k. I think the hard part is going to be financing these deals unless you have cash. Rentals could be harder to come by unless you focus on the older/starter home parts of O.P. and/or Olathe.


Thanks for the reply. Sounds like you live in the area.

There are a couple of reasons I don’t look to invest in Kansas. But, First…I had a realtors license with Weichert Realtors and when we pick up a listing we do a 200 to 300 home analysis of that area. I also had a mother-in-law thinking of selling her home after my father-in-law passed away. It was during this analysis I saw a particular trend. And, spending several years at the executive level in business I have become a trending nut. This is when I saw the rehaber problem in GVW. Homes that were selling the most had been homes below about $120K. The Rehaber homes were in $60K to $95K range are weren’t selling. I found a couple that were lsited take over mortgage and because the market in GVW was so bad nobody wanted them.

Back to Kansas and OPK. The homes in Kansas have been over valued for decades just like the Missouri side of the metro. I remember hearing about it when I lived in Arizona. So many of those homes are probably valued in todays market where they should have been all along.

SFH’s are a very high risk. In today’s market they are an even higher risk. Add the job problem on top of a home that might still be over valued even after buying it from an REO and you’ll end up with a house you can’t flip and will have to rent if you can find someone who hasn’t had a 40% to 50% reducation in income. Lets don’t forget that there are many subcontrators that haven’t haven’t come down far on their pricing so your rehab work might not be yeilding a positive return.

Next…Kansas government still has the milk our citizens attitude. Watch what happens over the next 24 months in property taxes. School spending is out of control at the school level and they will be raising school taxes arounds 20% to 30%. And, they still won’t know why the schools are still upside down. Missouri has a similar problem. The education system in most states need to be totally revamped. Just today I heard a Kansas school official say that we can’t reduce spending because with so many students with parents who aren’t making as much will need services from the school. This is where the problem is! Schools are not social service agencies. Schools need to get back to education so they won’t have to milk tax payers on property taxes. Less property taxes might mean Mom & Dad could buy more groceries and clothes.

SFH’s are as high a risk as the stock market. Especially now that most homes are not building equity. If your renter leaves over night your back to rehabbing and re-renting after a holding period. If you are able to sell…well I think that chance is pretty low especially when there are a couple of builders willing to build a new home for dirt cheap. But your back to those inflated taxes that as a RE investor, you, will have to pay as part of holding costs.

MH taxes are only a fraction of that of site built homes. Don’t drop that MH on a foundation. You’ll be taxed like a regular site built home.