Investing 101: Working With Banks

Recently, I've been getting a bit agitated and annoyed working with banks on their mobile home inventories.

Right now, the banks owned mobiles are just too much of a risk for what the banks (in my experience) are looking to get. It's getting to the point where even the parks won't buy them back. And, that raises a major red flag with me.

(Note: Typically, I try not to compete with the parks I do business with. Some of the parks I work with (but not all), will usually go after the bank owned mobiles - they've got a separate team of people and experience in this area (usually not the park manager). Regarding typical homeowners, they usually don't go after these as it is too time consuming and usually cannot be negotiated effectively over the phone like the bank owned homes).

To tell you the truth, I've never had much luck working with banks on their inventories in the past (even when I first started out wholesaling). It's like a game - too much back and forth with very little results (from my experience).

In my experience, it's just been too much time involved and too much paperwork with very little return. It's like I have to work a lot of them, submit paperwork, prove my case and wait for some "pie in the sky" decision maker to give me the green light. It's been the same way even with the mobiles.

A few weeks ago, I made this post on this bank owned home I put an offer on. Turns out, it's still sitting vacant out there. And, the park manager tells me even the park won't buy it - the bank is asking a pretty ridiculous amount on it.

What's even worse, is the most recent news I heard from another one of my park managers.

(Note: My park managers are my "eyes and ears" - they keep me updated on the latest news with the mobile home biz as well as what's going on in their parks. Having strong relationships with the park managers of the parks you choose to do business with is key to being successful in this business).

This particular park manager has been a real ally - we basically talk on the phone about 2-3 times per week. This park manager really enjoys keeping me updated on the latest news (aka gossip) on who's doing what and what's going on in the biz. It's amazing how much information I've learned from this park manager alone on the state of the business, other park managers/park owners, other parks, other investors, etc.

In any case, this park manager has been working with a couple banks trying to negotiate deals for me. I did not ask this park manager to do this - this park manager tells me they'd rather work with me on deals as they know I keep my word and have a good reputation than work with others who may not be as reputable.

(Note: There are a couple other park managers who attempt to negotiate bank deals for me with homes taken back in their parks. Their logic is they'd rather have someone they know and trust work these deals than some stranger who comes in that they do not know. Plus, usually when a home is taken back by the bank the park will go after the lender for the back lot rent owed - someone will need to pay the back lot rent. And, they will consistently attempt to contact the bank for the funds due).

So, the park manager calls me this week and tells me she's talked to one of the banks (of course one that owes her park a lot of back lot rent!). Well, it turns out they're willing to deal with me. But, there's a catch (of course!).

Here's the catch. I've got to buy a package of 10 mobiles from them, scattered all over (I'm talking thousands of miles away). Most of them are in the early 1990s-mid 1990s range. But, I've got to take them in "as-is" condition (I'm sure there's no way to check the water and/or electricity on these) and move them as well as take them with all the liens such as back lot rent owed, tax liens, etc.

And, all this for a low, low price of.......5k each! Wow, what a deal, right? Not really.

The park manager told me straight and I quote, "Basically, they want you to buy their crap." And, what's even more funnier is she told the bank rep there's no way I'd take this deal (if you could even call it a deal) as she knows that I don't buy "crap" - I only buy homes that I know I can stand behind (I really believe in my product).

And, you know what the bank rep said? The bank rep told the park manager and I quote (again), "Why do you have to go and ruin my deals?" Oh brother!

Then, the bank rep told the park manager to tell me that I better not let this opportunity pass me up as there may not be any more homes to buy (yeah right!). This is not the end - this is only the beginning. It's only going to get worse. And, being the buyers market that it is - it's the buyers who have the power, not the sellers.

After hearing this, I've made the decision to not even pursue bank owned mobiles at this time. It's not worth my time if they're going to be playing this game.

I'd rather focus my efforts on folks who really need to sell good, quality type homes in nice parks. Period.

It's a much better use of my time and energy. Why should I waste my time chasing after these bank owned homes that require too much time and too much work? Plus, if they're not going to be paying off the liens on the homes - forget it. It's going to cost more time and more money for me to deal with these issues (on top of the issues with the individual homes). No thank you.

Will things change in the future? Possibly. It will take some time - I think the bank inventory supplies really need to pile up before banks will start to have "fire sales." Of course, this will be on an area to area and case by case basis.

In any case, I'd thought I'd fill everyone in on my perspective on working with banks. I've had some folks contact me asking me if it's a good route to take. In all honesty, working with banks just hasn't been my cup of tea.

(Note: Though, I have heard of others who have had success working with banks. In this business, everyone will have different experiences - what works for me may not work for you. And, vice versa. Again, it's all a matter of personality and comfort level - everyone works differently).

A wise investor once told me, "If you're going to play the game, make sure you play by your rules. If you can't play the game by your rules, find another field to play in." And, that's exactly what I've decided to do.

Happy investing!

p.s. Feel free to leave comments on any post either here and/or my Facebook Page. Comments are always welcome, thanks for reading!

Terminology Tuesday - Security Deposit

(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 way 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).



According to Wikipedia:

"A (security) deposit is a sum of money paid in relation to a rented item to ensure it is returned in good condition. They are particularly common in relation to rented accommodation, where they may also be referred to as a tenancy deposit or in some places a bond. The owner of the item (the landlord in the case of accommodation) will take a sum of money from the person(s) renting the item (the tenant). If the item is returned in good condition at the conclusion of the tenancy the owner should return the deposit. If the item is returned with damage the cost of repairing that damage may be charged against the deposit, and part (or none) of the deposit will be returned."

Source Link

When first starting out and looking for parks to work with, you may be asked to fill out an application for the park as well as provide a security deposit in the parks you choose to do business with.

Do not be alarmed. In my experience, this is standard protocol.

In the beginning stages, it's going to take time to get to know the parks - their managers and their owners. If you think about it, you are a stranger and they don't really know you. Sure, you've come in and established a relationship. Though, that relationship needs to be built on trust. And, trust is something that can only happen over time.

So, when first starting out be prepared to encounter this issue. In this prior post about the Mobile Home Park (Lot) Lease Agreement, I had stated the park will probably run a credit check with the application and verify all the information just like a regular prospective tenant applying for the park.

(Note: Since the park is leasing the lot, it is a landlord tenant relationship between the park and the owner of the mobile home. The park is considered the "landlord" and the owner of the mobile home is considered the "tenant.")

Regarding credit, having an unsatisfactory credit history does not necessarily mean you will not be allowed to work in the park. It all depends on the park manager/ owner and how they "feel" about you.

If the park manager/owner feels that you are a trustworthy person, in most cases they will allow you to work in their park. For some reason, if there is an issue with credit on the application - they may require you to put a deposit (in good faith) in order to work in the park.

Again, this will be evaluated on a case by case basis - it depends on the park and their feelings towards you. Remember, this is a relationship - just like a marriage. They need to feel comfortable working with you - it is their park and you will need to abide by their rules.

(Note: On the other hand, make sure you feel comfortable working with the parks you choose to do business with. In the past, I've worked parks and have not been completely comfortable with their protocols. One park in particular had much lower qualification standards than mine which I did not feel comfortable with. Now, I only work with parks with the highest qualification standards as it complements my personality. Again, it's all a matter of personality and comfort level).

Over time, you will be able to build and strengthen the relationships you have with the parks you choose to do business with. In the end, it all boils down to trust. And, trust cannot be given - it can only be earned.

Happy investing!

p.s. Feel free to leave comments on any post either here and/or my Facebook Page. Comments are always welcome, thanks for reading!

Video: Special Message From Palm Harbor Homes

Since it's Friday, I thought I'd share with you a video sent to me from the folks at Palm Harbor Homes . It's very touching. Thank you for watching!

"Every time someone watches this video of Mark McGuinn’s song ‘Move That Bus’, our fantastic sponsor companies will donate one penny to The ALS Association to help find a cure for this terrible disease. Be sure to tell your friends and post this link on your Facebook page! You can HELP STOP ALS!"



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Does it Look Like a Deal?: 2/1 Mobile Home In a Park

With the popularity of the "Deal or No Deal" case study series, I thought I'd start a new one here.

While the "Deal or No Deal" case study series focuses on the mechanics of my thought process of evaluating mobile homes from beginning to end, this new case study series, "Does it Look Like a Deal," will focus more on a quick outside evaluation of mobile homes - I use this evaluation to prioritize the leads I pursue.

When I first hear of a home for sale, I evaluate 2 things. First, the park. And, second - the home itself.

If the home is in a park that I'd live in myself and feel comfortable working in, then it passes the first test.

(Note: I've mentioned before I only work in high end parks now due to this situation. For me, it's all a matter of comfort level - I prefer high end parks due to the type of clientele it attracts. Figuring out which parks you choose to work in will depend on your personality and comfort level).

Second, I evaluate the home by doing a drive by.

(Note: This is where me and Lonnie differ. When a lead comes in from the park manager while in the park, Lonnie goes to the home and meets with the seller that day. For me, I like to do a drive by of the outside to see if it's even a home I'm interested in pursuing - I don't buy every home that comes up available, even if it's cheap).

Now, most of the homes I pursue have a certain look - they are usually bigger and newer compared to the traditional "Lonnie" deal. Why is this?

For me, I tend to evaluate these homes more from a homeowner type of mentality and the type of clientele I usually work with. I have to ask myself, "Would I (my clientele included) live in this home?"

My thought process is that if it's not a home that I would live in (see the value in), then why would someone else? There's an old saying that if you don't stand behind your product and believe in it, then it's going to be really hard to sell it to others.

Just by looking at the outside of a home, I can tell whether or not I want to pursue an opportunity. I use the drive by method to prioritize which homes will take priority and use of my time. I don't want to put all my time and effort into a home I really don't think I can sell to the type of clientele I usually work with despite the price - I've been down that road before. For me, cheap doesen't necessarily mean better especially when working in high end parks.

(Note: This is just my experience and preference of doing things. I'm sure some have had different experiences. This is just what has worked for me).

In any case, this lead (see pic above) came in from a park manager while I was at my favorite park (a plus!). The park manager told me the seller had just come in a few days ago to let him know that the home is for sale.

(Note: Usually, when a seller in a park decides to sell their home they must notify the park manager. Having a good relationship with park managers is key to success in this business).

The park manager told me the home is a 2 bedroom, 1 bath older style home. Though, it was originally a 1 bedroom - it was converted to a 2 bedroom. When I heard this, I became leary. Usually, I do not like homes that have had any type of conversion.

Moving along, the park manager went on to tell me the owner was asking $9500 for the home.

Now, I've said this before - the asking price does not matter. It really doesen't because everything can be negotiated.

I see a lot of folks out there who look for deals based on asking price. In most of the deals that I've worked, the seller had started at retail price. It was only through negotiating and really building rapport with the seller (aka earning trust) where I was able to negotiate win/win situations.

To some, $9500 on a home is too much. For me, $9500 on a home would be a great price for the type of home I usually buy. Again, it's very important to learn your market. Without knowing your market, it's going to be really difficult to evaluate opportunities.

In any case, after doing a drive by of the home I knew this was not something I wanted to pursue. It just didn't fit the "look" of the types of homes I buy. So, I told the park manager I'm not really interested in this one.

(Note: Remember, there are so many homes to choose from - it's a buyers market especially in this economy. The sellers have to sell but you don't necessarily have to buy).

After talking again with the park manager, I was made aware of another opportunity. This one was due to a divorce situation. The park manager said it's a bigger home, newer, and something maybe worth looking into. Here's a pic:



After doing a drive by, I knew right away this was a home I wanted to pursue. I am currently waiting for the park manager to set up a meeting as the seller is still finalizing their divorce situation.

(Note: Notice none of these pics have "For Sale By Owner" signs. That's because most deals I've found are insider deals - these sellers just don't want to take the time to have so many people go through their homes. Most times, they'd rather work with the park manager to help them find a buyer - this is where I come in).

I hope this has helped to show you the process I use of evaluating and prioritizing the homes I pursue based on a quick outside drive by evaluation.

When it boils down to it, I only pursue opportunities that I feel comfortable working with. Again, it's all a matter of comfort level and personality.

Happy investing!

p.s. Feel free to leave comments on any post either here and/or my Facebook Page. Comments are always welcome, thanks for reading!

Video: Budget "Til Debt Due Us Part"

Since it's Friday, I thought I'd share with everyone a clip from an interesting series on personal finance I've started to watch, "Til Debt Due Us Part."

I think the concept of taking away credit from folks (as shown in the clip below) forces people to be more frugal. It's mind boggling to see the amount of debt that has taken over many of these people's lives as depicted in the series.

Though it may seem simple in nature, the basic concepts of personal finance have not been learned and put into play by many.

Hope you enjoy the clip!

(Note: For those interested, feel free to check out my Top 10 Personal Finance Books. Thanks for reading!)

p.s. Feel free to leave comments on any post either here and/or my Facebook Page. Comments are always welcome, thanks for reading!



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Book Review: "Deals on Wheels"

"You should never let the mail carrier pass your house without leaving a check."

- Lonnie Scruggs

Recently, I've had a lot of folks contact me asking what the difference between some of Lonnie's as well as other mobile home investing materials out there and which one I'd recommend the most. So, I've decided to go ahead and start a new series of posts - book reviews.

For those just starting out and learning about mobile home investing, I highly recommend Lonnie's book - "Deals on Wheels."

The reason why I recommend this book is that is the foundation and learning point - it explains the concept of "Lonnie" deals, what they are, and why they are beneficial. Basically, Lonnie lays out the blueprint in this book to his system of creating passive income.

Having a strong foundation is the building block - it is everything. Without a strong foundation, a house will not be able to sustain itself and will eventually fall.

Just like a house, Lonnie's book is the foundation of "Lonnie" deals and the system of creating passive income as a method to achieve financial freedom.

(Note: If you're interested in the concept of financial freedom, I did write an article here on why I've chosen "Lonnie" deals as my desired path to financial freedom).

Many have asked which of Lonnie's books would be a better buy. For those just starting out, I'd say start out with "Deals on Wheels."

I recommend giving it a good read. Then, I recommend reading it again. Why?

The way most folks learn is through repetition. When we see things and do things over and over again, that is how messages and information get ingrained in our minds. There's an old saying in advertising that we must see an ad at least seven times in order to remember the ad and the product - the same can be applied here.

Apart from reading the book, my suggestion is to go out and really take the time to learn your market. It is essential to know your market backwards and forwards before going into any deal. Without having the knowledge of the market, it will be very difficult to recognize opportunities.

(Note: For those interested in some of the steps I took to learn the market, feel free to look at this post (see item #3).

Regarding some of Lonnie's other materials, I would say to first start out with "Deals on Wheels." See if you like it.

I've said this before - this business is not for everyone. Not everyone who has read Lonnie's materials have pursued "Lonnie" deals - it is a matter of personality.

(Note: In this post, I talk about a fellow investor who tried Lonnie's system and didn't like it. Again, it is a matter of personality - everyone has a different path).

Then, if you enjoy the concept of "Lonnie" deals then and only then would I recommend his other materials. If not, you've saved yourself some money.

I'm going to end this review by saying this business (like any other business) takes work - hard work. I've said this before in this post - it took me 6 months to learn my market and another 2 months to do my first deal. Success does not happen overnight.

Though, with passion and persistence success will come. As Lonnie says, "When you're really committed to something, you won't accept any excuses."

Happy investing!

p.s. Feel free to leave comments on any post either here and/or my Facebook Page. Comments are always welcome, thanks for reading!

Terminology Tuesday - Purple Power

(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 way 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).


According to Aiken Chemical:

"This versatile cleaner and degreaser is effective on a wide variety of surfaces. The concentrated formula penetrates grease, oil and dirt on contact, then it creates a barrier between the stain and the surface. In just seconds you can wipe away even the toughest stains."

Definition Source Link

Since I work mostly high end parks due to this experience, I've mentioned in the past (such as in this post) that I rarely sell homes in "as-is" condition.

In my experience, most buyers who are looking for a home in these types of parks want everything pretty much fixed up. So, I usually have to get these homes in pristine condition before they are put on the market.

(Note: Here is where my style differs from Lonnie's - I usually don't sell "as-is" while he typically does. It's just a matter of personality and the types of parks and clientele you want to work with. In many cases, I've found the park as well as the condition of the home attract a certain clientele. Again, it's all a matter of personality and comfort level).

After I buy a mobile home, I do a complete walk through of the home noting what is needed to be fixed up to get the home in marketable condition. From the moment I walk in, I look at it as if I am the buyer - I have to put a new hat on and get myself into a "homeowner" type of mentality.

When going through the home, I think to myself - "If I were a potential buyer, how would I like this home to be fixed up and what types of things would I notice?"

In my cases, the home will need to be cleaned. There are 2 major things involved. First, the home itself (inside and outside). And, second the floor.

If the home on the inside is more of a "light" cleaning job, then I do the work myself. When I say "light, " I mean it doesen't need that much cleaning - just a spruce up here and there. And, also some vacuuming (if there is carpet and is not very dirty).

However, if the home on the inside needs more of a "heavy" (in the business they refer to it as a "deep clean") cleaning job then I end up bringing in a professional cleaning company.

(Note: In my experience if the previous homeowners were smokers and/or had pets usually the home will require a "deep cleaning").

I work with professional cleaning companies (commercial grade) if a "deep cleaning" is necessary - they are essential members of my team.

When working with professional cleaning companies, I've found most limit their usage to only 1 or 2 main products. I've learned from them that many of the cleaning products out there are really not all necessary to have when cleaning.

(Note: For those interested, a lot of cleaning products are just additional product lines. What I've learned is that it's not necessary to have one cleaning product for the kitchen, one for the bathroom, one as a degreaser, etc. It can all be done with fewer products).

One of the "secrets" I've learned in the cleaning business has been this product, "Purple Power." Basically, "Purple Power" can typically clean most anything. One of my cleaning crews uses this product for all their cleaning jobs - it's the only product they use. And, it works.

In one of the homes, my cleaning crew actually dipped the existing mini blinds in "Purple Power" to save me money (I had no idea they did this until afterwards) and all of a sudden the smoke stains came out - it looked brand new. I was baffled and amazed at the same time.

Personally, I've used it myself on light cleaning jobs such as this one - it worked great!

(Note: When using "Purple Power," I've had to be really careful as it's very concentrated and needs to be diluted. I used it to wipe up some cabinets. What I've learned after wiping the cabinets down, is that I need to go over it again with water as not to stain them. What ended up happening was that I wiped all the cabinets with "Purple Power" (diluted) and some of them stained a bit - I should have wiped them down in sections. Though, I was able to remove the stains with a good water wipe down).

Typically, I've been able to find "Purple Power" at Wal-Mart. It's a very good product and very affordable. Compared to Simple Green (which I like using as well), it's much more cost efficient.

(Note: In Germany, I learned that many professional cleaning companies use vinegar as their main cleaning product. I had no idea, pretty interesting!)

I hope this "Terminology Tuesday" post has helped to give you some insight on the cleaning process I use to get mobile homes in marketable condition.

Happy investing!

p.s. Feel free to leave comments on any post either here and/or my Facebook Page. Comments are always welcome, thanks for reading!