Buyers Approved!

Having a great day today, buyers have been approved for this one. Awesome!

It's crazy because the park manager just got back from vacation yesterday, the park application was just recently turned in with all the necessary supporting documents. The park manager really pushed it through for me on this one, I wasn't even expecting the call until next week. Though, I got the call today - buyers approved!

Awesome! I guess this is why it's so important to have a really close relationship with the park manager and staff. Already planning the celebration lunch for the park office, I'm thinking this time it will be a pizza party! :)

Happy investing!

Park Difficulties

Lately, I've been screening buyers for a mobile home that was recently purchased 2 weeks ago. Finally, I found a good family to work with - we are going through the application process right now. (When it comes to screening buyers, my philosophy is quality over quantity).

Usually, there are 2 steps for potential buyers to complete when working with me for a future mobile home (aka Lonnie Deal). They have to go through both my application process as well as the park's.

If there is an application fee for the park, sometimes the buyers would like to know if they've passed my application process first before they apply and submit an application fee to the park. I understand their position completely, so I do work my application first (if requested) and if they pass they submit theirs to the park. So, there are 2 different screening processes.

(Note: A fellow investor told me I'm that doing double work as the parks do their own screening. But, I have learned that I need to do my own due diligence and not depend on the park when screening buyers. Yes, it takes an extra step and more paperwork but at least I will have the confidence to know that I have screened the buyers myself).

Well, I received the application and required paperwork from the potential buyers. I went ahead and started to verify all the information today. Surprisingly, I got a very fast response back from the buyers' employer today who confirmed and supplied all the information I needed in terms of work information and income. (Usually, when I contact the employer to do the employment verification for the job it takes a couple days).

So, everything looked good and verified for the work and income information. Now, I just needed to confirm their rental payment history.

In this case, the potential buyers were living in another park (not too far away) and had their home paid off free and clear - their expense was only lot rent. They wanted to move out of the current park they were living in into this park - they had been looking for a long time for a mobile home in this park.

Their plan was to give the home to a relative and/or sell it for a quick sale. (Note: I only work in high end parks now. In my experience, the high end parks tend to attract the kind of clientele that fit my personality. I find the more lower end parks really don't fit my personality (comfort level) and are much more difficult to find buyers who fit my critiera. The reason I do not work lower end parks is because of this experience).

In any case, I know the manager of this park where the potential buyers are currently living. Now, this manager has a reputation among investors as well as the park managers in the area to be a very difficult manager to work with. So difficult, that I chose not to do business in this particular park. (Honestly, I did not enter this business to make things harder on me. If a park manager is difficult to work with, I tend to stay away from working that park).

I call the park to verify the rental payment history of the potential buyers. While on the phone, I could already feel the tension in the air. The first question that was asked was which tenants and if I had a written authorization to release the information from the tenants. I said, "Yes," and sent it over.

So, the park received it. Guess what? Well, now the park manager refuses to verify any kind of rental payment history with these tenants because she says they don't rent from the park. Meaning the tenants do not rent a home from the park, they own and just pay lot rent. I say, "Ok, I just want to verify they have been paying lot rent on time."

Well, you know what? The park manager says they don't verify that because they are not renters of the park. They know what I'm talking about - they are just being uncooperative. I guess they are doing everything they can not to let these people leave. Plus, a lot of the residents (who are families) of that park have been calling me asking if I have any mobile homes available in other parks. I know people want to leave that park because it's so difficult to work with the manager. (I guess a good source of potential buyers, eh?)

To make a long story short, I don't get the confirmation I need to verify the rental payment history. I call my park asking what they need to verify the information. They tell me if this park the potential buyers are living in are uncooperative, all we need to verify is proof of payment (i.e. checks, money order, etc) that the lot rent was paid and received on time for the past year.

So, I call the potential buyers and tell them the news. They are more than cooperative. Now, I have to go meet with them today and they will supply me with all the paperwork I have requested to get the info we need verified.

Wow, what an adventure this business can be! Hopefully, I can get this all wrapped up and move on to the next deal. Once this closes, it'll be another nice and relaxing cash flow payday for many years to come!

p.s. Here's a pic:



Happy investing!

Quality Vs. Quantity

I thought I'd address the topic of Quality Vs. Quantity. Recently, I've had some people ask me about the default rate with mobile home investing.

Turns out, there are some people out there who have done some mobile home deals saying that it didn't work out because they had to take back the homes every 3-4 months. Folks, it's all about quality. Not quantity.

Since I've been a landlord and managed my own properties in the past, I have experience in this area. I'd much rather go for someone long term than short term. This is why I screen all my buyers personally. Yes, if I do a deal in a park, the park managers have their own application process. But, I have to do my own due diligence. Here are the 3 top factors I look for when screening buyers:

1. Job History and Income

I verify all jobs past and present. I send an employment verification form for verification for each job. Once I receive the employment verification form back, I call and follow up to clarify any questions I may have. In addition, I also require all prospective buyers to submit current and past paycheck stubs and their W-2 for the past 1-2 years. Then, I take the info and analyze it. Basically, I use the rule of 3rds - the rent/payment required cannot be more than 1/3 of their gross income. If the rent/payment is more than 1/3 of their gross income, they simply cannot afford it. This is nothing new - this is one of the rules lenders usually use.

Now, what if the buyer(s) don't supply this information? Simply put, they cannot move forward with the application. This paperwork is a requirement. If they simply refuse, in most cases they may not be the most qualified candidate.

2. Landlord and Rental History

A park manager once told me the landlord history is one of the first things their park checks - it can say a lot about a person and their ability to pay. I've never forgotten this statement. In most cases, it has rung true. Again, I check all past and present landlord rental history by sending a landlord verification form. Once I receive it back, again I follow up with each landlord to clarify any questions I may have.

Now, what if the buyer(s) do not have any landlord and/or rental history? One such case is if they have been living with family and/or relative(s). In these types of cases, I still have them list them as references and verify the info they write down. Sometimes buyer(s) do pay some money in the form of rent when living with family and/or relatives. This information is all verified. If the information they list check out, it scores points with me as being honest - a very important quality to have.

3. Criminal History

In general, the parks will be sure to check this. I do my own search through the public databases in my area. When potential buyer(s) call in, I always tell them this is one of the most important things that will be checked. In most cases, this deters a lot of people who may have a criminal history.

Apart from these 3 factors and screening potential buyers, I also take the time to meet prospective buyer(s) - I show the homes myself. Why? It gives me a sense of who these people are and I can tell a lot from people just by meeting them.

Let's face it - it's one thing to talk to people on the phone but it's another thing to meet people in person. Sometimes people may not be what they seem to be when you talk to them on the phone - you find these kinds of things out when you meet them in person. To me, it's very important to meet potential buyer(s) in person - this is a long term relationship. I'd much rather take the time now and screen carefully than rushing in (which I find a lot of people do) and filling it fast.

Remember the race with the turtle and the hare? The turtle eventually won.

Happy investing!

Screening Buyers

Lately, I've been screening buyers. Let me tell you - it's basically the same conversation over and over again. I feel just like an answering service. Though, I've gotten better at screening and getting better at weeding them out.

When screening buyers, the first thing you have to keep in mind is your ideal buyer. What kind of buyer are you looking for? Does it matter? It really depends on your personality and who you feel comfortable with. Remember, this is like a marriage - once they're in, you're stuck with them (if you are owner financing).

Personally, I like working with good, hard-working, families. In my experience, if they know the area and are local - it's better. I'm not sure about the out of town folks. Families who live locally in the area already know what they want for themselves and their family - the area, schools, proximity to work, etc. The out of town folks may not know what they want - it may take longer. And, in this business - time is money.

So, what kind of questions should you ask when screening for potential buyers?

Well, you want to find out as much information about them as possible. Talking to people is more of an art than anything - it's not what you say but how you say it that counts. People want to be comfortable with you and need to trust you before they divulge any information about themselves. Don't come across as the business or corporate type. Believe me, in this business- it doesen't work. People like people who are just like them. Know your audience. Know your market. Know how they talk, think, and feel. Seriously, it will help you in this business.

Here are a few questions I ask when people call in:

-So, how did you get my number? Did you drive by the home? Or, did you see my sign or flyer? (This will tell you a lot. If they actually drove by the home, it means they are looking in that neighbohood. If not, you need to determine whether or not they are a good prospect and then instruct them to drive by first).

-What are you looking for? 2 bedroom, 3 bedroom? What area? (Let them tell you what they want. If they are calling just asking questions about the price of the home, answer them quickly and get off the phone - they may not be as motivated. Remember, you need to think as a homeowner - if you were looking for a home to buy for your family, what kind of questions would you ask? How would you approach the seller? If the person on the other end, does not sound like your target buyer get off the phone asap and move on to your next prospect).

-How many people are you looking for? (This will tell you if you are dealing with a family, individuals or both. If they question you, tell them the park has instructed you to ask due to occupancy limits with the local city ordinance code).

-Do you have pets? What kind? (Determine whether you want to take pets or not. Also, you need to know the rules of the park as well - some parks do not allow pets or have certain restrictions and requirements regarding pets. Find this out beforehand).

-Are you in a lease? Or, going month to month? (This will tell you their time frame for buying. I do like people who have been renting as opposed to people living with family and just looking for a place - renters have been pre-screened already).

-How much are you paying in rent right now? How much do you have saved up for a down payment? (If they do not have any money saved up, they may not be serious and may just be looking. Serious buyers have money saved up - remember it's just like being a homeowner. If you were planning to buy a home in the future, would you have money saved up for your down payment? Most people would and plan beforehand).

-Have you driven by the home? If not, give them directions to drive by and tell them to call you back if they are further interested.

After asking the questions above and determining whether or not this is your target buyer, then you can decide if you want to make an appointment to show the home. Only arrange showings with people you have prescreened over the phone and have already driven by the home. Do not waste your time with people who will not drive by the home and only want to take your time to show it. Remember, time is money.

It takes time and experience to learn to screen buyers. It's a skill and you will only learn by doing and asking lots of questions - information is the key. In time you will get better - it's just like riding a bike because practice makes perfect.