Why settle for Investment Base Hits when you can be hitting Mobile Homers?

Calling all Mobile Home Lonnie Dealers and Mobile Home Park Owners with Vacant Spaces to Fill!

Are you ready to avoid many of the risks of the traditional mobile home investment program and join the Mobile Homer Program for Mobile Home Investors?  How about getting paid by not only the family you sell the home to but also by the Mobile Home Park Owner!

Click Here to Watch the Launch Webinar

Announcing...

The Mobile Homer Deal 

Making Money with Mobile Homes in the Modern Era

 By Frank Rolfe and Dave Reynolds

Foreword

For many years, we have been hesitant about promoting the concept of doing Lonnie deals (a name familiarized by Lonnie Scruggs in his book Deals on Wheels). However, we always keep our eyes open and our mind available for fresh ideas and improvements to existing ideas.

There exists today an enormous disconnect between what the mobile home industry manufactures and the customer demands. And the financing to purchase homes, on the part of professional lenders, has virtually completely dried up. The demand for affordable housing is there now and will always be there, but nobody has stepped in to meet that demand.

A while back, it occurred to us that maybe there was a better way to build the mousetrap. We did some experimenting, and think we have hit upon that design. This program is the end result of those experiments.

We are still hesitant to buy mobile homes in mobile home parks that we do not own and sell or rent those homes under the old methodology that was promoted in books and seminars in the past.  We still also feel that there is better stability and profits in owning the actual mobile home parks. However, we understand that mobile home park ownership is not feasible for some investors due to limited cash to invest or else these investors may want to start small in the business.

Also, this program can be adapted to make use of your Self-Directed IRA's.  Forget the stock market, there are park owners out there that will do their best to get you a great return on your investment and share the risks with you.

We have devised a program that we believe will make your Lonnie Deals more profitable, take away a lot of the risk, and be a win-win solution for both the mobile home park owner and the mobile home investor. And at the same time, we are filling that gap needed for affordable housing and making more of our resident’s home owners.

What is a Lonnie Deal?

The term “Lonnie Deal” relates to a concept promoted by Lonnie Scruggs in his book Deals On Wheels. We encourage everyone that is reading about our new program to get a copy of this book if you don't already have it as it will help lay the framework for what you will be reading about in the Mobile Homer program. 

Original Book Available From Amazon Here

The basic concept is that you buy a used mobile home, and then re-sell it, at a higher price, with a down payment and monthly payments at a prescribed interest rate. These mobile homes are normally located on lots in mobile home parks. The homes to buy are found through “mobile home for sale” ads in the newspaper, through driving around in mobile home parks and looking for “for sale” signs in windows, and often through mobile home park managers who give leads.

A successful “Lonnie Dealer”, according to this business model, would have a large inventory of notes paying every month.

This business model takes advantage of the credit void that exists in the world of used mobile homes. For most mobile home buyers, there are no established channels of credit available. This segment of the housing market is reliant on cash or seller carry. Traditional models of consumer credit ranking fail in affordable housing, as most everyone has lousy credit due to health issues or other high-dollar calamities. But often those credit scores are not an accurate reflection of the customer’s ability to pay. Having a job, and needing a place to live, are often the two deciding factors in a customer getting the bill paid.

It is also a product of a housing market that ignores the affordable housing niche. While there are hundreds of brokers and lenders on every corner for homes from $150,000 and up, there are relatively few companies that broker the $2,000 to $25,000 mobile homes. As a result, the opportunity is there, in abundance, to step in and satisfy this void.

Over the past 20 years there have been thousands of investors out there doing these types of deals and with some being successful, some breaking even and some actually losing money. There is always the risk that the investor (you) would end up having to constantly repair the homes if your buyer moved out. Also, when you were rehabbing or trying to sell the home you also had to pay lot rent. Ten years ago, the lot rent was relatively low and the average rent nationally was in the $150.00 per month range. With rents now averaging over $250.00 per month and as high as $600.00 in some markets, owning mobile homes in parks where you have to pay the lot rent on vacant homes can eat away your profits quickly.

So how do you buy mobile homes, sell them for a nice profit, and carry the financing and make money without getting burned?

The Mobile Homer - a program that will help to guarantee your success!

Here is the solution and one that will increase your success of buying used mobile homes and earning an attractive return on your investment.

The program actually has both types of investors in mind. 

The first type of investor will be "hands on" and the second type will be looking for an experienced park operator to do all the work for them (possibly using a Self Directed IRA). 

If you fall into the second category, then you should still read the information below to understand the business but then in addition, here is a link to the page describing the "Done for You" program whereby you partner with the mobile home home park owner and they use their experience and resources and do the work for you.

Here is how the program works:

1. You first need to decide how involved in the process you want to be.  For example, do you want to find the home, negotiate to buy it, move it in, rehab it, and then sell it and collect the monthly payments?  Or would you rather go with a mobile home park owner that has the experience and resources to do all of this for you (done for you program), or maybe a combination of both.  
    

2. Next you decide how much you want to spend for the home which will include the purchase of the home, rehab, moving, and setup.
    

3. Then you will need a mobile home park to do business in.  You can go out and find one on your own or else you can browse through the list of mobile home parks that have been chosen to participate in this program and that will provide the Mobile Homer Guarantee and some great discounts and bonuses for you to do business in their park.

What is the Mobile Homer Guarantee?  Basically, it is a guarantee by the park owner that they will offer enough incentives, bonuses, and other assistance to make sure that you have the highest chances of success in meeting the returns on investment that you are requiring.  Each park owner will come up with a program that they think will help to make your mobile home park investments as successful as possible while reducing the potential risks that the traditional model had.  If you follow the guidelines setup by that park and you fall short of your expectations, then you may be able to get the park owner to offer more incentives to get you back on track. 

When you think about this you are going to be making the mobile home park owner some significant equity and profits and any smart park owner would be happy to make sure that this is a win-win concept for the both of you.

When you review the examples that are below and on the individual park offerings you will be able to gauge the advantages of this new program.  While we or the park owner can't really offer a guaranteed return that you may or may not have, what we can do is show you how this new program can increase your returns by 20% or more.  For example, if your normal return on a mobile home deal is 10% and you put that home into this program, that return could be as high as 30% with all the concessions and spiffs that the park owner will give you.   

This is the program in a simple nutshell so now let's discuss it in more detail.  And remember that this is a new program and we welcome any comments you may have to make it better. 

What is the Problem with Mobile Home Investments as Originally Promoted?

In our opinion the original Lonnie Deal concept had some fundamental flaws that may render the business model unprofitable for many investors. There were some basic assumptions left out of the model, such as the cost to renovate the used home into a quality home that is saleable, the fact that many buyers do not pay to the end of the loan commitment, and that most homes require substantial renovation between buyers, often erasing any income for the home for a period of many months.

The original model went something like this: you find a used home in a park for $4,000, sell it for $8,000 with $1,000 down, and finance the balance at 12% interest for 36 months. On paper, this transaction would yield a whopping 85.11% return on your money as demonstrated in the table below. 
 

Sadly that is not what always happens.  Here’s how we have seen it work in many cases.

• You buy the home for $4,000 and let’s assume you can sell it for $8,000 with $1,000 down.

• The customer pays for a year, then damages the house and runs off.

• It costs $2,500 to put it back together enough to sell it again.

• And the whole time it is empty, the lot rent mounts up at the mobile home park.

Here’s the scorecard: you have $3,000 in the home from the original purchase, another $2,500 from the rehab plus another $1,000 in lot rent.  Assuming the buyer paid you for 12 months you received $2,790 in payments.

You are now in the home for $3,710 ($6,500-$2,790) and now it is only worth $6,000. You turn around and sell it again but now your potential profit is $2,290 and your return is not going to be near as good as projected.

WAIT:  whether or not you agree with the old model and the returns that it generates, we have some good news.  If you were able to buy and sell that home without a hitch in the prior example and actually generate a return of investment of 85.11% on your money, then you would have been even happier under our new program.  Let's take that same example and show you what could have happened under the Mobile Homer Program.

Assumptions:  Park owner really wants the home to stay in the park but doesn't have the capital to buy it.  However, they like working with you and are willing to help offset your price of $3,000.00 by paying you $500.00 to buy the home and sell it.

Your return just increased by over 20%

This is just one simple example and the spiff may be a lot rent reduction, or a move-in credit, or all kinds of different things.  No matter what the spiff is, you have both just benefitted.  The park owner gets to keep a home in the park for only $500 and you are able to increase your return by having less capital in the actual purchase. 

Ok, back to the program.  There are some basic economic assumptions in the original mobile home investment model that have always held true and will continue to hold true as long as we can foresee the future. 
 

The first is the extreme demand in the U.S. for affordable housing.

The Demand for Affordable Housing

There is a huge demand for affordable housing. Affordable housing is, in fact, the fastest growing segment of the U.S. housing market. It is essentially housing for people who are unemployed to earning minimum wage and up to about $15 per hour.

Assuming an average total income of $24,000 per year for these individuals and families, and believing the U.S. government’s assertion that the healthy level of housing cost should not exceed 25% of one’s wages, then the correct budgeted housing cost for this group is around $500 per month. So where can a family find housing for $500 per month?

The normal option that comes to mind is apartments. However, let’s look more closely at that option. An apartment is not really the American Dream. There’s no privacy, with neighbors pressed against all walls and floors and ceilings. And there’s no yard for the kids or dogs. And the living quality of most apartment complexes in this price range is horrid. Despite the media always loving to use mobile homes as a scapegoat for everything that goes wrong in society, it’s actually the apartments that are a large incubator for drugs and gangs and everything that goes with it.

For these reasons, folks who live in apartments dream of getting out of them. And if you are not a higher wage earner, and you want detached housing, your only option is a mobile home set up in a mobile home park.

Another segment of the population that has an insatiable appetite for mobile homes in parks are Hispanics. One of the biggest shifts in mobile home park tenancy in many parts of the U.S. has been the growing segment of the Hispanic demographic that lives in mobile home parks (and we would add that this demographic as a whole usually makes up our best residents in the typical family park).

And this demand does not appear to be waning in the future. As apartments become continually less desirable, and incomes become lower and more stagnant, there seems to be no end to the demand for affordable detached housing – and mobile home parks are the best solution to this problem.

What the Customer Wants

The average mobile home customer is looking for several simple attributes:

First and foremost... they need FINANCING - otherwise they could just go to the dealer or bank and buy the home themselves.

A total monthly price, including lot rent, of about $495 per month (of course this will be higher in some areas but in about 80% of America this is a good number to work from).

This is not a number pulled out of the air, but actually what they can afford based on normal underwriting guidelines.

• At least two bedrooms.

• One large bedroom (master bedroom)

• A house that is free of any extreme aesthetic blemishes or smells.

Now, that’s a pretty easy customer to please.

It’s not that there’s something wrong with this set of priorities. Maybe those of us who live in more expensive housing are too demanding – maybe we’re too focused on materialism and not separating wants from needs. The important point is that you need to supply what the customer wants – and that’s a decent house at $495 per month. Don’t put your own tastes and wishes into the equation. 

Outside of the house, there are a few more things that the customer wants.

They want to be treated with respect. They know that they do not earn high incomes, but there’s more to life than money. They want to be given the same treatment as someone buying a $500,000 custom home. They want to be shown the house properly, be given a reasonable criminal and credit screening, and exchange their funds for the key.

Many mobile home and mobile home park investors in the past have missed this simple request. They delight in bossing the customer around and making snap, often irrational, decisions on who is “worthy” of buying from them and who is not. This is not only in violation of Fair Housing, but is in violation of basic principles of business that make it work.

The Mobile Homer Plan

The NEW model that we have come up with is based on the reality of the mobile home business, and is constructed to remove most of the risk of this type of investing, through a “partnership” with the mobile home park owner, as well as better thought out mechanics of the deal.

Please use the links below or at the top of any page to view all the information and resources available.