Investing 101: Finding Buyers

I thought I'd address the age old question a lot of folks have been asking me lately, "How do I find buyers?"

If you are investing in mobile homes and plan to buy and hold the paper, the question is not, "How do you find buyers," but "How do you find the right buyers?" There's a big difference. Why, you ask?

The difference is that if you find the right buyers, you are working with people who are in it for the long haul. You are working with people who really do want an affordable place to live and call their own. By having a place to call their own, they will take care of it because it is theirs. Why would they ruin something that they own? You are working with homeowners.

Real homeowners are people who love their home so much that they are willing to do anything to save it. If something happens to them financially, they will do all they can to either try to work with their lender and/or get another source of income to help pay for their home. The mindset is that they do not want to lose their home.

On the other hand, if you are just out there to fill your homes and find buyers just for the sake of it - you are not working with people who are in it for the long term. You are working with people who may not really want a place to call their own. Actually, they may be running away from someone or something, and may just need a place temporarily.

They may tell you they really need a place and may even suggest they want a place to call their own. However, in reality they just need shelter for the time being. Are they looking for a long term situation? Maybe. Maybe not. And, that "maybe not" can be the start of a headache for you.

For example, I had a buyer who applied recently. Basically, he told me he really needs a place to call his own and wants to get into something asap. He told me he's living with relatives, going month to month right now. Told me that he's got a good job - been working at the same job for 10 years. But, his credit is not so good.

Ok. So, I wonder if he's got such a great job then why is his credit shot? Why has he had trouble paying his bills to make his credit not so good? I wonder.

So, he applied for the home - filled out the application and submitted all the required paperwork. The park did a credit check on this individual and yes, his credit was not so good. He had a very low credit score.

From the credit report, what I found out was that this potential buyer was 90 days past due on a home mortgage. He failed to mention this to me. In turn, the park manager called him up and told him what we found. It all came out over the phone.

The potential buyer told the park manager that he was currently in default for the home that him and his wife own - they are in the process of getting divorced. He told the park manager that he needs a place asap as the bank is going to be foreclosing on them soon and he's afraid he may be locked out of his house.

So, the park manager asks him straight out, "Are you planning to walk away from the home?" The potential buyer says "yes."

That's all I needed to know to make my decision. This was not someone I wanted to work with. Why? If this person walks away from an obligation, especially his home, what makes me think he won't do the same thing to me? Enough said.

So many times, I hear investors say how they just need to find a buyer(s) for their homes and just want to get them filled. They tell me they don't care and as long as they are getting paid, they're happy. Then, they tell me it's ok because if the buyer(s) defaults, then they can go ahead and take back the home and do it all over again. Simple as that, right? Not in reality.

In real life, if someone defaults and you put the wrong buyer in there with the wrong mentality (by wrong mentality, I mean someone who is not willing to cooperate and/or work with you), it could turn out to be your worst nightmare. And, by nightmare I mean those nightmares that haunt you for the rest of your life.

Have you ever heard the saying, "It's better to have a vacant house than it is to have a problem tenant?"

According to Murphy's Law, "Anything that can go wrong will go wrong." So, it's better to do things right the first time - find a buyer(s) who will take care of the home and really wants a place to call their own.

This is a long term investment - your investment. If you gamble by putting the wrong buyer(s) in the home, you are putting your investment at risk as well as your sanity. It's better to be safe than sorry.

I'm going to leave you here with a video from John C. Maxwell that inspired this post.

Happy Investing!



Video Link

Knowledge is Power

"Knowledge is power."

This phrase rings so true. I feel the need to comment on it because I had a situation with a prospective buyer where I had to use my knowledge to help them make an informed decision. Basically, this buyer really liked the home but was a bit concerned about the structure of mobile homes with regards to rain and moisture.

So, I educated the buyer on what I knew about mobile homes - how you need to make sure the gutters around the home near the roof are working properly and re-routing the water away from the home and not damaging the side of the home. I pointed out the gutters on the home to the buyer and then pointed across the street to another home that did not have any gutters around the side of the home. Clearly, the water on that home is not being re-routed and could be a problem in the future.

Additionally, the buyer asked about siding and the possibility of water and moisture seaping in. I informed the buyer based on what I knew that usually happens with hardiplank (wood) siding if the gutters are not working properly, or even worse - no gutters at all. If water runs off the side of the home onto the hardiplank board, then yes - it will cause moisture on the boards and possibly even into the home. If this happens, I informed the buyer it's just a matter of replacing the boards with moisture and making sure the gutters are working properly to re-route any rain or water.

Then, I took it a step further to educate them about aluminum siding and it not having this issue as water just runs off the side since it is made out of aluminum. Though, it is always a good idea to make sure the gutters are in place, working properly, and water is being re-routed away from the home.

After educating the buyer and being there to answer any questions and concerns, the buyer appreciated me taking the time to inform, educate and share my knowledge.

So, what happened? The buyer felt comfortable with the home and decided to proceed with the application process.

Education is so important. I make it a point to continually educate myself and be a lifelong student. If I do not know the answer to a question or unfamiliar with a particular area of expertise, then I go out and find someone who does. I am always learning from the experiences of others as well as my own experiences.

Knowledge is power and that power is leverage. Leverage allows you to accelerate and move ahead faster than people who do not have the knowledge.