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

Finding Buyers

When it comes to finding buyers, its more of an art than a science - aka "trial and error."

There are 2 types of buyers out there - the serious ones and the not so serious ones.

Serious buyers are more concerned with the area they are looking in than the price of the home. Location, location, location. Sure, they do want a home that is affordable - that is your job to provide affordable financing. Though, the emphasis when they speak is on the location and not the price of the home.

Not so serious buyers will just ask about the price of the home without any or minor mention about the area. With the not so serious buyers, my recommendation is just to answer their questions and try to move on to the next call asap. Don't waste too much time on these people. These buyers are more interested in price and are looking for a good deal. If you spend time with them, they will try to get as much as they can out of the deal and you will feel exhausted. Even worse, you may end up with a buyer who wlll default.

It is a waste of time to spend all your time and energy on one buyer. When people call, you'll get a feel for the right type of buyer by listening to their words and the types of questions they ask.

But, talking on the phone is merely the first step. DO NOT, I repeat DO NOT meet with anyone who has not first driven by the home. Instruct everyone that you speak to drive by the home first before you set up an appointment to see the inside. Why?

Remember, actions speak louder than words. Serious buyers will drive to the home and check out the area. Matter of fact, most serious buyers who call have found you through the sign in the yard - not your marketing elsewhere. Serious buyers are already scouting the areas they are interested in. Not so serious buyers do not.

So, how do you figure out who the serious buyers are and the not so serious? Experience.

As in business, there's a difference between theory and what really works in the real world. To really learn, you must learn by doing. So, what does this mean? It means taking calls personally even though your phone is ringing every 5 seconds. Yes, this will happen. Be prepared. It means driving to the home to show it to the people who sound serious on the phone and have taken the extra step of driving by the home. Even if this means doing this repeatedly until the home is sold.

Once you have showed the home, instruct the buyers who seem serious the next step - filling out the application. Now, this is where you can weed out the real serious buyers from the not so serious ones. How? The really serious buyers will take the time to fill out the application and PAY the application fee ASAP. I give them two applications - one for the park and one for me. They have to pay the park's application fee but not mine. If they fill out both applications ASAP and pay the park's application fee, then I know I have a serious buyer. I tell everyone who fills out the application that they have to go through the application process. Based on the applications received, I pick the one I feel most qualified and most comfortable working with.

Believe me, it takes time to learn how to read people - it's a skill in itself. I've been through it both on the buying and selling end. Every deal will involve the same steps but I learn something new every time. This business works but with all things you gotta do the work to get where you want to be.