Buy a Mobile Home Park with Seller Financing

Lately, we’ve discussed various ways of obtaining financing to buy a mobile home park without using a bank for the loan. Nothing against banks, but the new down payment requirements, even if you can afford them, are not a good use of your cash. The real profit potential in the Jason Hartman style of investing requires that we put as little of our own money into the deal as possible. Today’s 20 to 25 percent demanded by the traditional financing industry is simply too much if you can avoid it.

One way to get around the ludicrously high money down requirement is to obtain seller financing. Here’s the scenario. A good rule of thumb tells us that around 30% of all mobile home parks are owned free and clear. Many are mom and pop businesses that have been run by the family for decades. This is the kind of opportunity you need. With this scenario, a seller knows that the park is a positive cash flow machine. It’s profitable and will continue to be as long as the buyer isn’t an idiot. By the way, to get the seller financing you so desperately crave, you’re going to have to convince the seller you are, in fact, NOT an idiot. Hopefully that won’t be too hard.

Why would a seller want to take on the perceived risk of financing the purchase? Let’s look at it his from his point of view. To sell the park outright incurs a huge capital gains tax, which most sane Americans prefer to avoid. Thanks to depreciation and other business deductions, the seller is used to paying very little in taxes. His primary goal is to let go of the responsibility of managing the property. Financing the purchase for you allows him or her to keep the monthly cash flow they’ve become accustomed to (your mortgage payment).

These are the points you need to make when approaching a seller about the possibility of financing the mobile home park for you. The bottom line is twofold:

1. You take the responsibility of the park off his or her shoulders.

2. They get a nice income stream at minimal tax risk and a fair interest rate.

The great thing about seller financing is the terms can be anything the two of you agree on. No pesky bank rules and regulations to worry about. You should be aware the seller can still ask for 25 percent down, but maybe he won’t. Maybe you could offer to pay a bit higher interest rate in return for a smaller down payment.

The ultimate task to make this strategy successful is for you to convince the owner you’ll make each and every payment AND continue to operate the park profitably. (Top image: Flickr | Tax Credits)

The Commercial Investing Center Team


CIS 31 – An Action Plan for Mobile Home Wealth

Join Jason Hartman as he interviews Stu Silver, The Mobile Home Man, regarding his mobile home and mobile home park investing strategies.  Learn the do’s and don’ts about investing, how to protect yourself from being taken advantage of, to know when you’re getting a good deal, and even how to inspect your mobile home to make sure you don’t find any unwanted surprises.  Stu says there are over eight million mobile home parks in the United States and you can get a good deal on a mobile home, or even possibly get one for free.  Stu’s first rule of investing is, “Protect yourself at all times!”  For more details, listen at www.commercialinvestingcenter.com.

Stu Silver has been investing in real estate for 30 years and has specialized in mobile homes for the last 18 years.  He is known as The Mobile Home Man or Uncle Zally, and has authored three books (under the penname Zalman Velvel), Mobile Home Wealth, Mobile Home Wealth Part 2, and How to Get a Good Deal on a Mobile Home or Even Get One For Free!. He also features his Mobile Home Wealth Systems on CD’s and does live Mobile Home and Real Estate Training.  Additionally, Stu writes a mobile home blog called “Kangaroo Kronicles.”  He holds the CCIM designation and is a licensed real estate broker, mortgage broker, auctioneer, mobile home dealer, and former real estate appraiser.  He has trained more than 5,000 people in real estate investing in his 3-day bootcamps and live on the internet.

CI 29 – Mobile Home Millions

Jason welcomes his friend and mobile home investing guru, Corey, to this episode of The Commercial Investing Show. Visit: http://CommercialInvestingCenter.com. Adding another entry to our favorite success stories, Corey started his real estate investing career in 1993 by selling his jet ski to raise enough money for a down payment on his first deal. Since then, he went on to build a sizable portfolio of real estate, including apartments, single family homes, self-storage facilities and mobile home parks. Over the past several years he has focused primarily on mobile home parks and self-storage facilities. Corey regularly shares his expert knowledge and enthusiasm for the industry at real estate clubs, national seminars and universities about investing in his favorite avenues of real estate investing: mobile homes, mobile home parks and self-storage units.

CI 25 – Self Storage Investing

Jason talks with Scott Meyers, CSSM©, the nation’s one and only self storage millionaire maker. Scott’s company focuses solely on buying and selling self storage facilities, that’s it. At the present time, he owns and operates several facilities throughout Central Indiana. Listen in at: http://commercialinvestingcenter.com/category/podcast/. As a leading self storage educator, he travels the country revealing why self storage has become the hottest sector in commercial real estate over the past 30 years.  Practically every real estate investor and entrepreneur has uttered the words “I’ve always wondered about self storage, I’ve heard those things were cash cows.”  As a result of his research and 16 years experience, he’ll reveal the top 10 reasons to invest in self storage and how built a $10,700 positive monthly cash flow his first year in one of the best kept secrets in real estate: self storage! You will learn the following:

The endless opportunities available in the over 60,000 facilities nationwide
The two reasons why demand is projected to skyrocket in the next 10 years
Why self storage facilities are “cash cows” and why they have outperformed many other investments

CI 22 – Intro to Commercial Real Estate and Getting Your Spouse Into Investing

Jason talks with commercial real estate expert Tolliver Morris and one of Platinum’s clients turned Investment Counselor, Dave Toombs. Visit: http://commercialinvestingcenter.com/category/podcast/.

Commercial real estate: A review of product types and their corresponding tenant profiles. What is best for you and what are the management responsibilities of; apartments, retail, office, industrial, triple net NNN properties, medical properties, mobile home parks or self-storage?

Client and Investment Counselor, Dave Toombs, talks about maintaining marital bliss while investing and helping his kids buy their own rental properties.

How To Turnaround A Mobile Home Park

mobile home parkMore times than not, a mobile home park purchase comes with a turnaround in mind. Often, the previous management/ownership have allowed the place to slip into disrepair and high vacancy, and selling is their way out. Your first step in returning the property to the land of profitability is to gently dis-engage the old owners and managers completely. We say gently because at some point down the road you may need to call them in the middle of the night and ask where the water main shut-off valve is, or something similar. The last thing you want to hear then is the ‘click’ of a phone being disconnected.

The next step in the mobile home park rehab process is to create a plan. Written is best. Rank everything by priority and get comfortable with the idea that it’s going to take a while and a bit of money to finish it all, so you should resolve not to go crazy in the process. What needs to be fixed right away? A massive water leak that is pooling into ponds around the park might be great for the ducks but it’s hell on your pocketbook. The potholes in the road can wait. Fix the water first. Broken or wasteful infrastructure comes before cosmetic repairs.

Break the turnaround plan down into years if needed and weigh the cost of regular inconvenient fees such as a $300 roto-rooting fee for sewer blockages versus $150,000 to replace the entire system.

Are some of the homes trashed? Instead of paying to have them hauled away, plow the money into repairs and then offer it for rent at the price of the lot only. It’s almost guaranteed someone will eventually take you up on it and then you’ve turned a sure-fire loss into a profit. Ultimately, a successful mobile home park turnaround is accomplished the same way you eat an elephant – one bite at a time.

The MHP Listings Team

MHPListings.com

Flickr / Tambako the Jaguar

The Mobile Home Park Retirement Game

mobile home parkWhile it’s true that retirement is no game, the process of providing a nice cash flow into your Golden Years is easier than you might think. Whether an investor with money to burn or a long-time owner of a mom and pop mobile home park, it’s time you looked at this particular brand of real estate as your final job, if you want to call it that.

It only takes one mobile home park of sufficient size to fund your retirement. How big does it need to be? How many lots? That depends upon what life style you want to indulge in during retirement. For example, let’s say you have a 100 lot park that pays for itself and provides enough cash flow to live on. The bills are paid, food sits on the table regularly but long dreamed of vacation trips to Acapulco and Greece remain firmly on the back burner.

How is that going to change in retirement if everything remains status quo?

The problem we’ve observed is that often times mobile home park owners have let their business savvy slip as time goes by. Increase the income on each lot by a mere $50 a month and you just added $5,000 a month to your income. Think you could take a trip every few months on that? The first thing to do is make sure your rental rates aren’t below market. If they are, raise them. It doesn’t matter if you’re great friends with the Winkelsons in space 129 who have been there for twenty years. We’re talking about business here. They’ve been getting a steal and things need to change. If your space rent is waaayyy below market rates, perhaps you could raise it in increments over the course of a few years.

Another money waster in your park is likely your water and sewer system, which has been known to routinely consume 10% of total revenue. Are you paying for it? If you are, quit, and shift the cost to your residents. Paying their own utilities is not a sadistic request. They’re using the darn stuff; let them pay for it. Now consider that with two easy policy changes you have turned your “okay” mobile home park investment into a cash flow machine. Don’t sit around wondering why you couldn’t do the same.

Like Nike says, just do it.

The MHP Listings Team

MHPListings.com

Flickr / The Consumerist

Local Marketing for Your Mobile Home Park

mobile home parkIf you have vacancies in your mobile home park, it’s time to get serious about local marketing via the internet. Marketing to the world is easy but doesn’t exactly make sense with your business. Chances are, you’re not going to convince that family in Nairobi searching for a rental to relocate to your mobile home park in French Lick, Indiana. So how do you figure out where local people are hanging out on the world wide web?

1. Build a website you control. Waiting for a webmaster to update text, photos, and offers does not qualify as an efficient use of your time. The WordPress blogging platform is very easy to learn, even for newbies, and so powerful. Plus it’s free if you’re hawking your own product/business.

2. Google Maps can be extremely effective for drawing local searches to your mobile home park website. Check out http://Google.com/places to learn more.

3. Basic SEO. Regardless of what the internet marketing gurus say, search engine optimization doesn’t require an advanced degree in physics. Basic tweaks which you can easily learn and implement are all that is necessary. The free course at BumMarketingMethod.com will teach you all you need to know.

4. Put offers on your website. Local renters in search of a mobile home park space quickly become deadened to the look-alike, sound-alike websites out there. Differentiate your business by splashing a time limited offer on the front page. Give the casual surfer a reason to do business with you right now!

5. Offer something for free in return for their email address. An email list might be your most valuable business asset because it allows you to market to potential customers again and again – until they finally give in and buy.

This is not the final word on local SEO but at least gives you a starting point to incorporate internet marketing into your business approach. After all, you have to go where the people are and, no matter where you live, today people hang out on the internet.

The MHPListings Team

MHPListings.com

Flickr / Si1very