Friday, July 31, 2009

Words of Wisdom From Lonnie Scruggs

Here are some words of wisdom from Lonnie Scruggs, "The Godfather" of mobile home investing. (I highly recommend reading his book). Enjoy!

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Wednesday, July 29, 2009

Passion Vs. Money: Which Road Are You Following?

Thought I'd touch on these two subjects today - passion vs. money. Which road are you following?

Time and time again, I see a lot of people get into real estate investing and say they just want to make a lot of money. People get drawn into the "hype" and illusion that real estate is a "get rich quick" plan. In reality, it's not.

It takes work, hard work to run a real estate business. It takes skills and continuous learning and education. It takes time. Success does not happen over night. Those that have said they have made a lot of money in real estate over night, either got lucky and/or they are not telling the entire story.

Moreover, it's about dedication to the business and to yourself. Too many times I've heard real estate investors ask, "What's the best technique to make the most amount of money?" Or, "How can I make the most money with the least amount of work?" When I hear and meet these people, I know they are only doing it for one reason - money. And, you know what?

Those that work for money will let money control them. Money is their God. They do not know how to create money, manage money, and take care of money. In turn, they will always lose money and will be a slave to money for the rest of their life.

I've known a lot of real estate investors, including many rehabbers and real estate agents, who have made a lot of money in real estate. Every year, they make their six figure income and by the end of the year they are broke wondering how they will ever pay their income taxes. The money they have made is lost and spent.

As each year passes, I hear the same stories over and over again. And, at the end of the year they are scrambling to find one or many real estate properties to buy and hold (despite negative cash flow and/or breaking even) just to offset their tax situation. This is a never ending game - it's a losing battle.

I'm here to say that the best return on your investment is the investment you put in yourself. Life is short - we only have one life to live. So, why not live a life of happiness and pursue your passion?

Money is not everything without having anyone to share it with. Remember Ebenezer Scrooge? He had all the money in the world yet had no one to share it with.

Too many people I know have pursued money over their passion. Many of these people have ended up divorced, broke, and unhappy. They have neglected everyone who has truly cared about them including their friends and family because they value money over everything and anyone else - they are truly alone. Is this really the kind of life you want to live?

You have to really sit down and assess your goals and what you really want in life. Get to the "why." One of the most frequently asked questions I get is, "How do I get started?" It all starts with you and what YOU want. Not what everyone else wants for you.

Most new people who get into real estate investing want to do big things. They want to buy a large apartment building, a mobile home park, and/or commercial real estate building. Though, many of them have never done a real estate deal in their life and/or do not have much experience in the real estate niche of their choice. This is dangerous.

It's better to start out small and grow slowly getting a taste of the business to see if it's for you, than to get stuck with a large deal only to find out this is not what you wanted to get into. Trust me, it happens.

That is why when people ask, "Why even do a small mobile home deal? I'd rather buy a mobile home park," I know they are entering dangerous territory. Without the experience, a person can get really hit hard taking on things that are in over their head.

In the end, passion will always win over money. If a person is more passionate about something, then that person will always beat the one who is working just for the money. Always.

I'm going to leave you here with a video by Gary Vaynerchuk that inspired this post.

Happy Investing!

Video Link

Tuesday, July 28, 2009

Terminology Tuesday - Mobile Home Park

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(Note: I think it's important to know the terminology and words used when learning any new business including mobile home investing. I came up with 'Terminology Tuesday' as a day to go over the terminology used in the mobile home business. It's important to know the terminology when talking to people in the business so you're all on the same page).

As defined in Wikipedia:

"A trailer park is a neighborhood consisting of an area of land where travel trailers rest. The term may also be used to refer to mobile home parks or manufactured home communities.

In the United States, tornadoes and hurricanes often inflict their worst damage on trailer parks, usually because the structures are not secured to the ground and their construction is significantly less able to withstand high wind forces than regular houses. However, most modern manufactured homes are built to withstand high winds as well as a mainstream home, using hurricane straps and proper foundations."

Definition Link

Generally, the park will charge lot rent to occupy each lot in the park. There are many pros and cons to investing in mobile home parks. For more info, check out this post.

Happy Investing!

Friday, July 24, 2009

Top 10 Time Management Books

In order to run a business, it's very important to be a good manager of time, money, and people. Time management is very important as it allows you to manage your time more efficiently and prioritize.

In order to make better use of my time, I read time management books on a regular basis. Then, I use what I learn in the books and apply to real life situations.

Here's my Top 10 Time Management Books that have helped me. I hope it will help you too!

1. The 4-Hour Work Week
2. Getting Things Done
3. The 7 Habits of Highly Effective People
4. The 80/20 Principle
5. Get Everything Done: And Still Have Time to Play
6. The Time Trap: The Classic Book on Time Management
7. The 25 Best Time Management Tools & Techniques
8. Never Check E-mail In the Morning
9. Time Management From the Inside Out
10. Successful Time Management For Dummies

Wednesday, July 22, 2009

Investing 101: Mobile Homes Vs. Mobile Home Parks

Recently, I've been getting a lot of mail from people who are new to the mobile home business asking me if it's a good idea to buy a mobile home park. They've told me they've heard that mobile home parks are great investments - they have read articles and have gone to real estate forums.

Folks, the only way to learn a business is to experience it first hand. If you're not familiar with the mobile home business, the best way to get involved is to start small - do a deal or two and see if you like it. I say this over and over again. A lot of times, people get excited about the dollars and the returns they hear about when they don't think about the big picture and what's involved.

By doing a small deal, you will learn the basics of mobile home investing. From there, if you enjoy the business and truly want to pursue it in the future then you can go on to do bigger deals. But, if you start by getting into a big deal from the get-go and have no idea how to run a park, manage a park, hire people, buy and sell homes, market knowledge, etc. - then you will find yourself "stuck" and a good investment can easily turn into a bad investment if not properly managed.

I'll give you an example. I knew an investor who owned a few single family homes. He never did a "Lonnie" deal in his life. Though, he was convinced that mobile home parks was one of the best investments. So, he took a mobile home park bootcamp and went through the training. After the training, he bought his first park - a 60 space mobile home park.

After a few months, things were going well until one day he had a problem - a big problem. Some waterlines (including the main waterline) broke in the park. He had it looked at and found out it would cost him $60,000 to get it fixed. Well, he didn't have $60,000 cash laying around in his bank account. So, he ended up refinancing some of this single family homes and pulled out the cash from there. So, a few more months roll by and he gets a problem with his septic tank - this time it would cost him another $25,000. This time he has to take a home equity loan against his own house.

Turns out, this investor had so many issues come up that he ended up selling the park for a loss - it cost him too much time and money since he did not know the mobile home business first hand. When he bought the park, he did not have a team in place and was not prepared for the issues that came up. He also had a hard time filling his park and finding homes since his market knowledge was limited.

Here's what can happen when these infrastructure issues come up:

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Another investor I knew bought an 80 space park, again after taking a mobile home park bootcamp. The park was half full - this was a turn around project. She had never done a "Lonnie" deal either. Her experience was in rehabbing single family homes. Turns out, the spaces could only fit very small 12 feet by 50 feet homes - they do not make them this small anymore. She tried to find homes that would fit the spaces and was unsuccessful. Instead of re-spacing the lots as she did not want to do this as it would involve an entire infrastructure electrical upgrade, she decided to get mobile homes to fit the spaces custom made. Each home would be $12,000. Ok, problem solved right?

Turns out, these custom made mobile homes were only 1 bedroom. She tried marketing the homes for buyers but it was very difficult. She tried targeting the senior citizen market but soon found they too were picky and/or could not afford her prices as they were on a very fixed income. Like the first investor, she was not prepared for these issues that came up.

These stories are not meant to scare but to inform and increase awareness. It's much better and less risker to start off with a small deal than it is to get stuck with a big deal. If you make mistakes with a small deal, at least they are small mistakes. On the other hand, if you make mistakes with a big deal they can be big - huge and can possibly bankrupt you if you are not prepared.

I'll leave you with a story about The King, the Pawn and the Peon. I hope it will help you to see the importance of starting small and learning through your experiences. It is the small successes that will determine the large ones. And it is the small successes where I have learned the most.

Happy Investing!

Tuesday, July 21, 2009

Terminology Tuesday - Hitch

(Note: I think it's important to know the terminology and words used when learning any new business including mobile home investing. I came up with 'Terminology Tuesday' as a day to go over the terminology used in the mobile home business. It's important to know the terminology when talking to people in the business so you're all on the same page).

As defined in Wikipedia:

"A tow hitch (or tow bar) is a device attached to the chassis of a vehicle for towing or a towbar to an aircraft nose gear, or paired main gears. It can take the form of a tow-ball to allow swiveling and articulation of a trailer, or a tow pin and jaw with a trailer loop - often used for large or agricultural vehicles where slack in the pivot pin allows the same movements. Another category is the towing pintle used on military vehicles worldwide.

In the U.S. the vehicle attachment is known as the trailer hitch. Trailer hitches come in two main configurations: receiver type and fixed-drawbar type. Receiver-type hitches consist of a portion that mounts to the frame of the vehicle that has a rearward facing opening that accepts removable ball mounts, hitch bike racks, cargo carriers, or other hitch mounted accessories. Fixed-drawbar hitches are typically built as one piece, have an integrated hole for the trailer ball, and are generally not compatible with aftermarket hitch accessories."

Definition Link

Basically, the hitch (aka "tongue") is attached to the front of the mobile home and used to transport the home from one place to another.

If you plan on buying mobile homes and moving them, it's best to see if the hitch is in place. Otherwise, you will need to get a hitch welded on by a professional welder. Without a hitch, a mobile home cannot be moved.

Also, the hitch will typically add 4 feet to the length of the mobile home. For example, if you have a 16x70 foot trailer the length of the trailer itself will be 16x66 (70 feet minus 4 feet for the hitch = 66 feet). It's important to know this kind of information especially when moving the home to a new location to make sure you have enough space for the new lot/area.

Here's a video on a mobile home being moved - you can see the truck is pulling the home which is connected to the hitch. Check it out!

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Thursday, July 16, 2009

Entrepreneurs Can Change the World

Very inspiring video, check it out!

VIdeo Link

Wednesday, July 15, 2009

Lot Rent Fees

I've had a lot of people ask me about lot rent fees and how much they should be in the parks and/or areas they choose to work. People have told me different prices of lot rents in their areas ranging from $75 per month on the low end, to $400, $500, and $650 per month respectively on the high end. Most recently, I've heard $1000 per month (per one of my "tweeps" @pmjohnson99).

So, what should be the target range of the lot rent for the parks you decide to work in?

The short answer - it doesen't really matter. Honestly, the amount of lot rent a park charges should not have a large effect on your decision whether or not to work in a particular park. Why not?

It's more important that you work in a park where you know the demand is there and you can find a buyer. I've said this before, it's very important to know your market. Each area is different - knowing your market and knowing who and what your buyers want, including where they want to live, is extremely important.

On my first deal, I was also concerned about lot rent. It was pretty high - almost $400 per month, this park had one of the highest lot rents in the area. Though, once I researched the market I got a feel for the demand in the area.

Driving around the area around the park, I could tell this was an area that was growing and had a lot of demand. I found out this park was in high demand - a lot of people wanted to live in this particular park. It was a nice park in an extremely good location. People wanted to live there and there was not much affordable housing in the area. There were apartments up the street that were almost at full capacity and the rents were steadily increasing.

So, I decided to move forward with the deal based on my market research and knowledge. Had I not done my research and known the area, it could have been a very risky deal as I would not know what I am getting myself into. If I did not know the market, I may not know what people are willing to pay for a home in that area and/or what types of features they are looking for.

Common mistakes people make who are not familiar with the market include overpricing and/or underpricing a home, asking for too high or too low of a monthly payment, not knowing what features people are looking for in a home in that particular area, selling "as-is" when most people in that area want things fixed up or vice-versa, etc.

All of these mistakes cost both time and money. And let's face it, time is money. That is why it's extremely important to know your market before you go into a deal. It's very dangerous to start investing without knowing your market.

Knowing your market is extremely important - I cannot stress it enough. Knowledge is power.

(If you would like to read more about getting started in mobile home investing, check out these tips).

Happy Investing!

Tuesday, July 14, 2009

Terminology Tuesday - Carpet Remnants

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In one of my last posts, I mentioned the importance of comparison shopping - becoming a more informed and educated buyer.

Lately, I've been dealing with contractors regarding some recent fix-up issues. One of the things I had done recently was replace new carpet in the living room of one of the trailers. The old carpet had some really tough stains - it just didn't all come out with the carpet cleaning crew. As a result, the home didn't show well as flooring, especially when someone first walks into a home, is one of the first things people notice.

Since I was just replacing the carpet in the living room, which is a very small area, my carpet guy suggested looking for a "remnant" (aka "carpet leftovers") for the job. Usually, carpet installers and places that sell carpet will have "remnants" or carpet leftovers, after completing big jobs - these "remnants" or pieces of carpet are too small for regular carpet installation jobs. So, they will sell them (or if you're lucky - give them away) to people just looking for a piece for a smaller carpet job. Usually, they will need to sell the "remnants" quickly as to free up space - this is where you can get a pretty good deal instead of paying for a brand new piece and/or roll of carpet.

Learning where to find and spot these deals will take some time. Though, it will save you money in the end. And, the money saved will quickly add up.

Here's a video on how you can make your own carpets/rugs and where you can find carpet remnants. Check it out!

Video Link

Sunday, July 12, 2009

Twitter Shout Outs Via TweetTube

For all the Twitter users out there, I just found out about Tweetube through one of my "tweeps", @entrepreneurHI, who has continually given me "Follow Friday" shoutouts.

Thanks @entrepreneurHI for your continued support. (For those of you interested, @entrepreneurHI specializes in teaching and training private money lending nationally). Other "tweeps" mentioned @ShaeBynes - my fellow blogging buddy, @rjsellscheap, @HarrisonPainter, and @BiggerPockets. Check them out!

Here's the latest clip. Enjoy!

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p.s. I almost forgot, if you're on Twitter and would like to follow my "tweets" I'm @mobilehomegurl. Have a great week!

Thursday, July 9, 2009

Mobile Home Rap

I just had to post this up - this is a very entertaining video using mobile home terminology. Check out Jerry here (he's a mobile home mover) and his mobile home rap!

Video Link

Wednesday, July 8, 2009

Mobile Home Repair - Subfloor Repair

I've received a lot of questions regarding how to go about replacing flooring in mobile homes. Usually, most of the floors in mobile homes are made out of particle board, which usually wears down and breaks easily over time. In most cases, it's better to have a more solid type of wood as your flooring such as plywood.

As for replacing flooring in mobile homes, if there are only a few soft spots in the floor - you don't have to replace the whole thing. What you can do is pinpoint the soft spots by cutting out the damaged area(s) and replacing them with plywood - this is what's referred to as subfloor repair.

To help see how this is done, check out this video.

(If you're interested in reading and learning more about mobile home repair, I highly recommend these books).

Happy Investing!

Video Link

Tuesday, July 7, 2009

Comparison Shopping

Hi everyone! Sorry I haven't posted in awhile - I've been really tied up lately. Though, I wanted to make a quick post here regarding comparison shopping.

It's very important to shop around and do some comparison shopping for things you buy - over time it does add up. Remember, you're not being cheap - you're being frugal. There is a difference. And, why should you pay more for the exact same thing?

By learning to bargain hunt and by becoming a more informed shopper, you will save a lot of money over time. And, the money saved can quickly add up and be used towards other things for your business and/or your personal life.

So, let me give you an example of one of my most recent comparison shopping experiences.

For instance, take this simple bath mat I bought for one of the trailers recently.

As you can see from the pic, this cost $4 - I purchased it locally from the Family Dollar Store. Before making my purchase, I did some research and visited a couple places for similar bath mats. Wal-Mart came at $5.96 - it came close. By purchasing the bath mat at the Family Dollar Store, I saved almost $2.

Now, I know saving $2 may seem very mundane and not that big of a deal. But, imagine if I had to purchase 20, 30, 40, or even 50 bath mats? As you can tell, the costs add up.

When running a business and even personally, I think it's very important to have a frugal mindset. So much money is wasted everyday - most people don't even realize it. By learning to become more frugal, it forces you to be more resourceful and in turn save your hard earned money for other things.

(If you're interested in reading more about having a frugal mindset, I highly recommend this book. It really opened up my eyes and reiterated some things for me).

Happy Investing!