PURA VIDA!!!!

What an amazing time we had in Costa Rica!!!!  Learned how to surf on nearly 5ft waves in the Pacific Ocean in Jaco, pronounces Haco.  Cliff dove into freezing cold spring water from a 75 ft waterfall in la Fortuna.  Climbed an active volcano in Arenal.  And went zip lining on the biggest zip line in CR.  This was my first trip out of the country where I actually needed a passport, now a days I think even Canada needs to see a passport.  I could never have done any of this I had was working a 9-5…

Ok so I might have over exaggerated.  I could have saved up, requested off work, make sure my calls where on hold, got someone to cover for me, hope I had enough vacation days to cover the time off, hope I get the time off, pray no one has an emergency and I cannot go at the last minute…

I was asked a few years ago that asked wouldn’t it be easier to just go to college and get a “safe and secure” j.o.b. versus trying to make money for yourself via real estate… I paused for a moment and thought. NO, I said after a moment of silence.

Question. Which statement is more difficult in the long story that is your life.

1. Build a passive empire (be it real estate/mlm/oil/whatever for the next 3 years (building a residual cash-flow vehicle) then to live the life you have always dreamed.  You have probably hear – Do today what others won’t to live tomorrow like others can’t.

2. Work a comfortable job with good pay for the next X number of years until retirement; then live a secure mediocre retirement.

I am sure since you are reading this blog you have at least an interest in the 1^st of the two life choices.

Always remember why you are doing this when others are out for the moment having fleeting fun.    Take a little extra time everyday to work on your own education, faith, business, love.

Happy Investing-

What a Great business!!!!!!

What a fantastic day!!

Just wrapped up a slam dunk deal!… I love waking up not knowing what the day will bring.  Not to mention the thrill of NOT having to call people and ask to buy their homes.  We (in the MH business) really do deal in a business with almost zero competition!!

While most other investors are climbing over each other or cutting each other’s throats to score a deal; we in the mobile home business have very little resistance and seem to cruise along undetected.

This morning I received a call today from a new post I have been running in the “mobile home” section of my local penny saver.

The call came in early this morning; I quickly got up and drove to take a look at the 2/2 1978 singlewide mobile home in a family park.  The distressed seller hasn’t lived in the home for 4 months, is tired of paying lot rent and ready to sell.

Over the phone she told me the asking price was $4,500 for the MH.  The home needs almost nothing; no cleaning, no handyman work, no appliances needed… It’s almost perfect!  The reason I say “almost nothing” is because 1 window is broken and has a board over it! (Big whoop)  I may not even fix this before I  sell it!

Appliances are included, central heat and air conditioner, tiled floors, fresh painted walls and it even comes with a 27 inch color television (oh-la-la)

The park charges $315 a month for lot/pad rent (average in my area) and she is current on all payments.

After talking with the seller for a couple minutes about life, her family and finally about the sale of her mobile home, I got her down to $1,700 cash! The only real negotiation technique I needed to negotiate her down to this price was to keep pulling away.  She kept chasing me for the sale! Plus, next month’s lot rent is coming due and I we both knew it.  (Just 1 more bill she didn’t want to pay!)

I got a nice, clean 2/2 1978 mobile home, made a friend who will keep her eyes out for more deals (and I told her Ill pay her handsomely for the tip), and was finished signing papers by noon.

For the rest of the day I went over a buddies, went to see a movie (paranormal – boo!) and played rock band… what a great life!

Happy investing

-John

Chaetomium, Stachybotrys & Rhizopus Oh-my

What do all these types of mold have in common?

Besides having long, funny sounding names; all these types of mold are present in a recent vacancy I just got back.  The TB (tenant-buyers) moved out 2 months ago, after only minor cleaning I had the property filled within 2 weeks (actually the daughter of another TB).  I managed to resell the home hold financing for even more profit than to the previous buyers.

3 weeks after living in the home the family finds mold, after a deeper visual inspection behind drywall (really a wet-wall now) mold is everywhere.  Roof, insulation, walls, etc.

I just got back the test results to find the top deadliest molds were found… dammit!  (I suppose this will be a good learning experience for all of us – if I have to look for a bright side!)

The current TB did the usual spray bleach and water but the more that they sprayed the more and more they found.  Plywood 4 layers deep under all sinks from the previous TB only acted as a band aid to the seriousness of the problem!  Once pink insulation now dark olive and black due to mold growth.

This problem has obviously been going on for some time.  While it was vacant this past time; walking through the home mold was not visible, even the mildew smell that usually existed could not be smelled until everything was opened up.

The family reported headaches and breathing problems before they had to relocate to another vacancy I luckily had nearby.  No serious long-term effects were caused!

I am meeting with a few mold removal companies tomorrow and can’t wait until I hear how much this is going to cost!

How could this problem have gotten so bad? The TB I had inside of the mobile home for years were excellent TB and extremely handy people.

I’ll keep you all posted.

-John

Making Henry Want to Slug Me!

I was helping my friend Henry out today.  He is trying to buy his first 2 mobile homes located in a family park just outside of Tampa, Florida.  We had met with the park managers to clear up a back rent issue from the previous owners we were trying to buy from. You see, its always best to check with the managers of the park to make sure there are no existing problems with homes before you buy, etc.

Henry had made a killer offer to buy 2 mobile homes from a burnt out, frustrated landlord inside the park for $375 each.    That’s 2 singlewide mobile homes; one a 3/1 and the other a 2/2 both with all appliances included, and minor cleaning to be done.  The offer was accepted by the seller.

He was able to lock the deals in with the owner of the mobiles but was having a problem.  It seems that the burnt out land lord had not paid his lot rent dues for the past 4 months, a $1760 balance plus late fees. ($220/month X 4 months X 2 homes)

I had used logical and rational reasoning to explain that we were not the ones in debt but the owner from whom we were buying the mobiles from.  If they, the park management, allow us to buy inside their park they can turn they non-performing lots into money making assets (they can start getting lot rent in from us every month!).  They seemed to just roll their eyes…

Some larger parks mandate that the back lot rent be paid by the new owner or else the park will go after the title to the mobile home.  These larger parks I have found it very hard to negotiate with reason because the manager is just following protocol and reaching the actual out of state owner is more work than I frankly want to do.  Smaller parks, mom and pop parks, which are family or locally owned will usually wave this fee for you and go after the previous owners instead of you.

As the friend, me and the 2 park managers/owners (small family owned park) talked more it was clear that they wanted to follow legal avenues to gain possession of the 2 trailers for themselves.  Without a doubt because the homes are both so nice!

This raised an immediate red flag for me and normally I would be out of this park at that moment!!!  My friend and I stepped outside as I told him what I thought.  ”This park is in the mobile home business for themselves.  They are trying to slowly own all the mobile homes in here to make a huge profit.  Don’t bother with making yourself any competition.” I said.

Henry is young and desperately wants to make his first deals.  He is having trouble letting go of this deal he has worked for.  Some issues are simply speed bumps… others are brick walls. He kept looking at the bright side and still wanted the homes.  He convinced me to go back in and try again to get the payment lowered. I sighed and agreed.

We went back in.  Like I said before nothing rational or logical would convince these park owners to wave the $1,760 late payment.  A fee that wasn’t even ours, but because the park wanted the homes themselves they were putting up a fight and were damn sure trying to get every nickel of what they owe out of us…  In a brief fit of frustration at the insolence of these managers towards us I stood up and told them what I thought.  That because of people like them they are driving good hardworking people out of this park for their own profit and gain.  We wouldn’t pay for those fees in a million years.  (A slight over exaggeration since my friend would have happily paid them if he had too, 2 mobiles for $1,000 each is a no brainer, usually…)

“But it’s the principle of the thing”, I told him, as we where leaving.”  He wasn’t to happy with me then, but I know I did right by him.

I guess we’ll see what happens.  LOL

Moral:  There are more an enough good deals to be done. Don’t look past clear issues… Want a new deal, “Just go down the street and turn left!”

Happy & Smart Investing!

-John

Quick Marketing

Bandit Signs

Bandit Signs

Bandit signs are corrugated plastic signs usually 12 x 18 or 24 x 18.  They are inserted into the ground usually on a metal stand.  I prefer the 12X24 vertical signs.  I feel those are the rarest and will get the most noticed.

Notice what colors are being displayed in your town and try to use another color, pattern, and style.

These signs are disposable and cost around $1.00-$2.00 each with stand. (don’t pay more)  Check with local laws.  Some counties will fine you for every sign they see up.  It is a wise idea to hang the signs Friday evening so that they stay up over the weekend.  The city employees that grab the signs typically do not work the weekends.

When I am selling a home Or “Renting to Own” the home I like to hand write the pertinent information on the sign. Use the fattest Black Permanent market you can find. $2.00 a Wal-Mart.

Rent-2-Own (bold on top)

3/2 Mobile Home in Family Park

750/MO Low Down

XXX-XXX-XXXX

If I am advertising to buy Mobile Homes I like to pre order my signs to look similar to the example below.  Again be aware of the colors and size used in your area already, and use something different.

Make sure to hang your bandit signs at stop LIGHTS and stop SIGNS, at least 20-50 feet in front of the stop LIGHTS (so that someone does not need to be stopped directly at the stop light to read the sign) and 20-30 feet in front of a stop SIGN (because everyone will have to stop at the sign).  And the further back we place them the harder they are to steal.

Place them on county and city poles and lights at your own risk! (you should not do this)  But if you do…  This is very effective.  I still have signs hanging that were hung literally years before.

Over the years I have been told numerous times to stop hanging signs.  I have never been fined or reprimanded in any way.  1-866- SIGN-GUY is the company I recommend nation-wide for bandit signs.  They will even put the signs out for you; however I have never had this service done.

Pursuit of Happiness

1. (QUESTION) Hi John. If you were starting over tomorrow without any cash, bad credit and in a completely different market, what steps would you take over a 30 day period to to secure your first mobile home deal?

Starting off with no money will not hinder your wealth in the long run.  I remember my first mentor telling me it is much better to have no money and no credit when starting, this will force you to do make creative deals that generate positive cash-flow every time.  I was apprehensive of this statement when I heard it at first. Because you have no money you will try to squeeze every penny out of each deal – resulting in a very high profit for you on every deal!  I have never done a bad deal when I have negotiated great terms with zero down and low monthly payments to my seller… 

I have however, in my later years, when I’ve had money, done my fair share of bad deals by signing my name to a mortgage or buying homes out right with cash.

Use your mind instead of your wallet!!

Anyways back to the question:  It is so important to align yourself with someone who is where you want to be.  Starting out with no money, bad credit and in a topsy-turvy market is just how many of tomorrow millionaires are starting off today, and how many of us started out in real estate.

I would start by investing in mobile homes located in mobile home parks, after 10-15 mobiles generating between $3,500 -$7,000 a month passive profit, I would move onto buying great creative deals with block homes or mobile homes that were attached to land, and while building towards my long term goal of every property free and clear of a mortgage (either seller held or bank) and marketing every which way I could I would wholesale the properties that where wholesale-able in order to build up more bank reserve to invest in more properties or pay off said mortgages/liens.

Buying and holding has always been the way to wealth.  From biblical times to the current economy; families will always need a place to sleep and a roof over their heads.

Long story short – Bust your Ass for the next 3 years, building your own business! – Not working for someone else.   And you and your family will never have to worry about money  or work another day in your lives!

Happy investing!

 

-          John

Senior Mobile Home Parks?

I have a great deal lined up in a senior mobile home park? What do you think about senior parks?  Have you ever bought in them? 

The senior parks disqualify anyone under the age of 55 from living there.  That is a huge percent of our target audience.  Unless I already have a qualified  buyer lined up I tend to stay away from mobile homes in senior parks.  I am not a senior citizen myself so it would be another hoop to jump through to use my parents identification to get approved by the park. 

You may hear that senior citizen tenant-buyers are typically clean, quiet and always pay on time.  My experience has shown that although seniors may get government checks every month they are just as late and flaky as anyone else.

A majority of the homes you find in these parks will not need much repairs.  And depending on the retiree, he or she may not be physically capable to fix any repairs needed.  Not a huge problem, just something to be aware of!  Additionally, some of your less healthy tenant-buyers may not make it to the end of there notes with you… if they pass away first.  In this situation it is important to either have a power of attorney or quit claim deed to the property.  When elderly parents pass away and leave their mobile homes empty without paying, their kids almost never want the a mobile home, esspecially in a age restricted park… and they certainly will not just start paying you where their mother or father left off.  Hence you almost always get the home back without any problem!  This is another great reason to have your homes in personal property trusts.  You can transfer ownership via beneficial interest but keep your trustee the same to avoid probate.  

Age restricted parks are typically more nit-picky about who they let in, not everyone over 55 is automatically approved.  I once had a senior park try and tell me they needed to see a 700 plus credit score, kids under 18 can not stay longer than 1 week during the entire year and no pets allowed. 

Depending on your state, there may be an 80/20 rule… or a similar percentage adding to 100% - This law/rule states that no more than 80% of residents may be over 55 years old (or some specific age); the other 20% must be under 55, but over the age of 18.  How can you tell? Ask the manager!

 If you are an older individual who lives in a retirement mobile home community or just feel more at home in these areas by all means invest in these types of parks.  If you are not of qualifying age you will typically need a front person who is over 55 years old to be on the application.  But they typically do not ever need to come in to the office, unless the community requires they pass a community approval review process.  This is where the community, can meet-and-greet the new prospective members to the community.  Again you will not even be living in the home so this is just more work than I am willing to go through.

If I have a serious senior tenat-buyer already approved at a certain park I would look for a home in that park to purchase with the intent to resell to my buyer. I have had a senior buyer give me $3k down payment on a home, sight unseen, that I did not buy yet, she told me the specific of what she wanted and was very happy for me to find her a home within the community. (This 62-year-old teant-buyer is the mother of another tenant-buyer I have; this is why she was willing to let me hold her $3,000.  They both have been paying almost always on-time for the past 2.5 years.) 

Again there are more than enough deals in family parks that you do not need to worry with this hassle.

Unless you have it directly from the park manager/owner that you are allowed to:  1. Buy and sell mobile homes using notes.  2. Have a tenant-buyer that is under the age of 55 live there (per the 80/20 rule or something comparable for your state.)  3. And they know that you are under the age of 55, if you are.  4. the application process is somewhat fair and reasonable.   This would be a fairly flexible park, and I wouldn’t mind looking inside.

 

Avoid ‘the Certainty of Poverty”

 

BE A SUCCESSFUL CAPITALIST

* Yearn to Learn!

* Ask for help/advice!

*Give more than you get!!

*Celebrate the success of others!!

**ACT!!!

(from Peter Fortunato)

Exit Strategys

 

Even before you buy your next mobile home it is very important to have an exit strategy lined up to sell your home and start making money!  Whether selling for cash, holding financing, leasing, and/or selling the note – there are different tax benefits and repercussions to these options.  As well as different variations on cash-flow options (length of time, amount down and payments per month)   Cash = If the home is in nice condition you may be able to sell this home outright for a nice cash profit!  This is very straight forward.  You receive cash and hand over the title or SOL (statement of ownership).  The seller may have the cash readily available or has to secure a bank loan, which is very hard to do now-a-days.  When selling the home for cash you will be expected to pay short term capital gains tax (under 1 year) or long terms capital gains tax for anything held over 1 year.   Owner Financing = This option creates an income stream from the sale of the mobile home.  There is typically interest and principal payments that allow for a passive income stream.  You can and should charge a down payment, depending on repairs needed.  Owner financing can last for as long or as little as you negotiate.  When I say negotiate I mean your order:  Remember you have what they want, You need to tell the prospective buyer what the “terms” are (length, amount down and per month); Not the other way around.    I recently listened in as a new investor, Cliff, over the phone as he was talking to prospective tenant-buyer for his newly acquired mobile home in a park.  He couldn’t have sounded more unsure or soft spoken!  What happened?… This particular buyer kept talking and talking an pushing Cliff down and down on down payment price due to this and that (repairs needed and his own personal troubles)!!    When talking to a “Seller” I agree to be moderately moldable to fit their needs.  However when dealing with a prospective “Tenant-buyer” BE FIRM!  You tell them what the price is down and per month, if they laugh at you or say no, thank them for calling and hang up!  If they are giving you problems this early into the game or needing you to make concessions say next… unless for some reason you trust them and wish to make a deal OR they are the 10th person in a row to tell you the home is way over priced… in this case lower the down or monthly and raise the amount of months needed to pay the home off.   You will be paying the same taxes as a cash sale – Yes, even though you are receiving payments over time you are taxes on the full purchase price day one!   Unless perhaps your CPA is better than mine, in which case I need his number!   Lease = Most park managers do not want renters inside the park.  I agree with them, I never just straight rent any of my places.  For the main reason I am looking for long term tenant-buyers mentalities as well as I wish for them to fix all their own repairs.    You can simply construct an addendum to instruct the renters to fix any repairs under a certain dollar value and not call or bother you!  Let’s say their base rent is $775 a month; For every month they don’t call you their rent is discounted to $675 (the amount you originally wanted).  Get it…  If they do these minor repairs (leaky toilet, change light bulbs, minor drywall repair, broken windows, etc.) themselves they get to pay the discounted rent, if they call you for any reason their rent jumps up to $775 for the month.  This is a great incentive for them to fix the repairs themselves, or not repair them at all!   I do not do this and do not recommend this.  Much more liability with renters, if you sell the home and hold a note you become the bank and don’t need worry about being sued, or repairs (for the most part, read prior posts on “ASAP” repairs)      Option to Purchase = I typically sell the homes with owner financing as above.  However if the home is located in a park where they do not care if ownership is transferred as of day one, I will use an option contract.  This allows me to rent the home until I get ready to sell it. (I use a separate form to insure they will do all necessary repairs – different from straight renting because they will be buying soon, one day!  This has allowed me to defer taxes until I sell the home at a substantial discounted price.   Either way of selling I make the tenant-buyer reimburse ME for paying the yearly registration taxes and insurance!   Selling the Note = If you are looking to make quick cash but cannot find a readily available cash buyer look for a “note buyer”  after you sell the home via owner financing, you can sell this note for a discounted price (or a portion of said note) to a note buyer looking to make a nice long term profit.  (I’ll explain deeper in a further post!)

Capital Gains Tax Rates

Type of Capital Asset	Holding Period	Tax Rate
Short-term capital gains (STCG)	One year or less	Ordinary income tax rates up to 35%
Long-term capital gains (LTCG)	More than one year	5% for taxpayers in the 10% and 15% tax brackets (zero percent starting in 2008)
		15% for taxpayers in the 25%, 28%, 33%, and 35% tax brackets

                                                                                                (Pulled from on-line source)

Happy investing!

-John

Before your 1st deal!

Hi Everyone,

Mobiles home have gotten a bad wrap lately… well, always really.  It is very important to start off with some great forward momentum.  Important for all newbies that have yet to make a first deal…. make sure that your first deal is anything but skinny.  This great initial success will carry you through for more great deals…

Make sure your first deal is a grand slam!… a real steal, that you  may almost feel bad about buying from your seller.  A grand slam deal will be one that you are jumping up and down for joy that you just bought… you havent made any money yet but you know you’re about to. 

I know, i know every deal should be a home run!  I always suggest a min cash flow of $350 per month on every mobile home you buy and hold! 

For your 1st mobile home deal, you want to look for a 3/2 (3/2 or 4/2 bring the most money monthly, double or single really shouldnt matter) in nice condition, great price (a dollar amount that will return to you in 5-12 months or less… especially with the down payment!)  and a sizable down payment over 1k.  In addition to buying the home for a steal, the home should be easy to market and sell by the first dozen people that walk through.

This will not only set up on a great foundation, but also keep you pumped up for the road that is ahead of you.

There may be a difference of opinion on this but, you can always go back to those good deals later… or move onto the next one!  Theres always more!

How do i know a great deal when i see it!  For your 1st deal (if you have little money to start) make sure the home does not need any more repairs than can be done in a weekends time.  Remember guys the homes do not need to be fresh off the showroom floors.  (If you have some cash reserve, feel free to purchase a home with a little more repairs that are necessary before you market the home!  Perhaps this may take a week to fully fix the home, and pay a handy per to do it, if you have the funds.)  Either way the homes should pay off in 5-12 months or less, esspecially with the down payment! 

But again if your starting with very little money mobile homes are a great way to go.   If you believe it is a great deal, spend the money to have a home inspector walk through the home (walk with him to see what he looks for!) After my very 1st deal i have rarely used an inspector.

A young kid, new to mobile home investing, came to me afterhe bought a mobile home that he thought would be a great investment.  As i looked at the pictures the home was a mess, and for me to say that it really has to be trashed.  Plus he paid to much… didnt negotiate enough.  The seller didnt tell him about the mold problems, the shitty manager that required a $500 deposit from everyone that moves into the park (per home) and the fact that the home is a 2 bedroom 1 bath. 

He had plans to take a weekend with a buddy and fix the home up himself.   Wrong!  Im not saying that me or you are impervious to crappy deals like this but if we do a bad deal like this the first time out we will have a bad taste in our mouths throughout our investing days… that just human nature. 

So make it a great  1st deal! One that you’ll tell stories about for some time to come.

Happy investing

-john

ps…i’ll update everyone on the kids success!