Baby Steps

I've been asked the question about "how to get started" time and time again by many people wanting to get into investing. In all honesty, what separates the people who are successful from the rest is taking action. Yes, education is important. But, you can only learn so much. Most of the stuff I have learned through experience - out in the field.

I guess what I've learned the most is the small successes are the most important - aka getting over your first deal or making your first offer. Through small successes, you build confidence and get the experience for larger successes.

I still remember my first deal in this business - I was terrified that my offer would not be accepted and the park manager would not allow me to work in the park. I had to coach myself beforehand (aka positive reinforecement).

But, you know what? I got over it.

I learned the most important skill I could have in this business is not how much experience I have or how many deals I've done. The most important skill for me is my ability to connect with people - get them to like me, establish trust, and master the power of influence at the same time making a win/win situation for everyone.

Now, that I think about it - it's really about having people skills. Business is about people. No matter how much technology we have in the future - it all comes down to people. And people like doing business with people they like and trust.

I continue to improve my people skills and read up on sales and marketing skills in order to improve myself. Robert Kiyosaki, author of "Rich Dad, Poor Dad," mentioned if you're planning to run a business you need to know how to sell. It is so true.

So, no this stuff does not happen overnight. The people who want to get rich quick really never last in this business. It requires commitment for the long haul because after all nothing happens overnight. Success comes to those who work at it and continue despite the obstacles.

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.

Mobile Home Conference

I recently attended my 2nd mobile home conference. It was pretty neat to see some familiar faces and meet some new people in the business. I did learn a few things the second time around.

Looking back a year ago when I attended my first conference, it was very overwhelming and exciting with the amount of information I had learned. This year, I felt more relaxed and found it easier to understand concepts that were above my head the first time around.

What I've learned after talking to people who are actively investing and learning various investing avenues, is to keep the big picture in mind. In reality, the whole point of investing and creating a passive income for me is to free up my time to be able to do other things. I definitely do not want another J.O.B.

So, in talking with a couple fellow investors I have come to find an investment vehicle that will allow me to have a life without much involvement from my end - mobile homes. When I first started investing in real estate, I think my goals were so big that it was so hard to attain and keep my involvement at at minimum.

Honestly, I like keeping my operation small. It gives me complete control. I know a fellow investor who runs a pretty big operation with a portfolio of a couple 100 unit apt buildings, mobile home and RV parks. Every time I see this investor, he's always so stressed out and seems to never have time to do anything except work. Managing larger portfolios involves managing more units and more people. I really do not want to have that kind of life where I am working all the time and have no time to do other things. Its just not for me.

At the conference, I saw another fellow investor who started out doing these small mobile home deals. He did 45 of them until he finally quit his job. Recently, he just finished a turn around mobile home park project - 185 spaces. He had to move his family out of state, live near the park, and it took 3 years of his life. After talking with him again this year, he told me what he missed about doing the small mobile home deals was the time he had once after he put the deal together. He could move on to the next deal and the passive income came in without him being there.

He gave me some good advice and told me if I'm happy doing the small mobile home deals and they are allowing me to free up my time to do other things, just to continue with that and build up passive income with each deal.

Another one of my fellow investors told me that he went back to investing in single family homes in nice areas because he just did not enjoy managing apt units. He told me the biggest issue for him when he owned his apt building was not having the time to do other things. He was constantly receiving calls about the units needing this and that - it was a headache.

All in all, I've decided to continue investing in mobile homes and just building up passive income. Maybe someday I will look into other investment vehicles. Or, maybe I will just sit back, relax, and enjoy the time I have created by investing in mobile homes.

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.

Taking Action

"If you want to get things done, sometimes you've got to do it yourself."

This rings so true in running a business. Either you do it yourself or you get someone else to do it for you. But, what happens when over and over and over again, things do not get done by the very people who you count on to get things done? Well, then you either do it yourself or get someone else to do it.

What really gets to me is when people say they are going to do something but never end up doing it. Now, I can go on and on and lay blame on people. But, in the end it's not going to help achieve the end result - getting the task at hand done.

I'm going through this right now with a minor rehab. It's a case where the park manager has offered to help with many aspects of the rehab. Problem is promises get made and things do not get done. I think the park manager has good intentions of helping but at the same time - time is money. And, I've got a lot of money riding on this project.

Instead of laying blame I had to go out and take action. One of the things that needed to get done was replacing the flooring in the master bathroom around the toilet. The flooring was old and very unstable, not safe to use.

So, I called my handyman and he said he'd be able to replace the floor but could not take out the toilet as that is a job that requires more skill for someone such as a plumber. The great thing about my handyman is that he knows what he can do and knows what he cannot. That is one thing that I've learned about hiring people - the good ones know their capabilities and stay away from things that are foreign to them.

In turn, I called my plumber and he agreed to remove the toilet so that my handyman could start work on replacing the floor. After my handyman finished the job, my plumber said he'd be able to put the toilet back.

Well, my handyman finished the job as scheduled. So, I called my plumber but he was well on his way to Mexico to go out of town. I had no way of reaching him as his cell phone coverage did not pick up.

What to do? I was stuck with a new floor in the bathroom and a toilet needing to be put back in its place. Well, I had to do something as people were anxious to see the house and I had not made it available to show due to the rehab work.

So, I bring this issue up with the park manager. She offers to call her plumber and tells me if he can't do it, then her husband who does fix-up work can. Well, to make a long story short the plumber never gets back to her and her husband got sick. This dragged on for a week.

So, I had to make a decision and I had to act fast. With one last attempt, I called my plumber and guess what? He just got back. I told him the problem - he apologized. And, now he is going to put back the toilet where it belongs.

What is the moral of this story?

I guess what I'm trying to say is not to depend too much on one person for all your contacts. I've tended to do that especially with the park managers. I think they have all the right contacts because they deal with fix up work and issues in the park all the time. Yes, that's good. But, I also have to have my own team and be able to make decisions when the issue arises.

So, I've began to make contractor contacts by residents of the parks in addition to park managers. And, a lot of times the residents of the park do contract work for a living - go figure! So, I've made it a habit to talk to the residents in the parks I work with and ask them who they've used for contract work on their own houses. Also, I scout the bulletin boards at the parks I work with for contractor cards. I spend time calling these contacts. I get a feel for what they do and their experience because I never know when I may need someone quick when one of my other contacts cannot perform work I need to get done. I've learned it's always good to have backup people lined up just in case so you don't rely on one person to provide you with all the contacts as I have with the park managers.

By taking action, I have avoided inaction. It is better to take action than not to act at all.

Inspecting a Mobile Home Part II

After you've inspected the inside, you're ready to inspect the outside. When inspecting the outside of a mobile home, make sure you inspect the entire home all the way around.

The first thing you'll want to check is the structure of the home. Usually, homes have two kinds of siding depending on the age of the home. They are:

1. Wood
2. Aluminum

If you are inspecting a home with wood siding, feel the wood and make sure there are no soft spots. If there are soft spots, determine how the problem occurred. How is moisture getting to the wood? Do the gutters (up above) need to be replaced?

On my first deal, I looked at a home with wood siding. It had soft spots on parts of the wood siding, it looked like a few boards needed to be replaced. I brought in 5 contractors to look at it to determine the problem. I found out the gutters (up above) needed to be replaced. The gutters had holes in them (yes, the home was over 10 years old) and when it rained the water would just go through the holes in the gutters running the side of the home. Over time, the water seeped into parts of the wood siding thus creating the soft spots I found in the wood.

If you find some soft spots when inspecting a mobile home with wood siding, determine how many boards need to be replaced and the labor it would cost to fix it. Regarding working with contractors, you can work with them either by having them provide the materials and do the work, or you provide the materials and you just hire out the labor. I will have an article about working with contractors here down the road.

The other type of siding mobile homes tend to have is aluminum siding. Usually, aluminum siding requires less maintenance and attention than wood siding homes. Make sure there are no rusty spots and all the siding is in place. Be sure to watch out for gaps in the siding which may allow weather elements such as water, sleet, snow, etc, into the home.

After you determine the condition of the siding, next thing you'll want to check out is the roof. Ask the seller when the last time the roof was replaced and/or re-sealed. Usually, if they are re-sealing the roof it's best to do it every 2-3 years. Ask the seller if they have had any leaks and/or other problems with the roof and be sure to write things down.

When inspecting the roof, I like to take a step back to see the top of the roof. Make sure things look in tact and in order. Watch out for any gaps or anything that may look like they have patched things up. If you see anything that stands out, point it out to the seller and ask them to explain what you are noticing.

Check out the gutters (up above). The gutters need to go all the way around the house. Again, ask the seller when the last time the gutters have been replaced and if they have had any problems with them. It's very important to make sure the gutters are working properly so the water is being routed properly when it rains.

Next, you'll want to check out the a/c unit. Have the seller turn it on (from the inside). Make sure it is working properly. Again, ask the seller when the last time they changed it and if they have had any problems with the unit. (You'll notice you'll be asking these same questions over and over again as you inspect each part of the home).

Look at the windows. Make sure there are no broken windows and they keep away the outside elements. You'll also want to check out the skirting - make sure it's in tact. If there is no skirting, ask the seller why and how long it has been unskirted. (If you are inspecting a home in a mobile home park, usually it will be skirted per the rules of the park but not all the time).

Go all the way around the home inspecting all the things up above. Jot down anything you notice that may need some work. Point these items to the seller and ask them if they are going to do anything to fix it up.

Lastly, be sure to obtain the serial number of the home. This is important so you can check to see if there are any liens and the seller is the owner of the home. You'll have to check with your state to determine which agency regulates Manufactured Homes. Usually, the serial number is on the back of the home. If you do not see a serial number, ask the seller. With very old homes, usually the serial number would be on the title.

Once you've completed your inspection and jotted down all your notes, ask the seller how much they think each item would cost for the things that need fix up work. If they do not know, just ask for an estimate of what they think. Then, ask the seller if they would be willing to fix it up themselves or give you a discount for selling "as-is." This will come in handy when it comes time for negotiation.

Depending on how comfortable you feel, you may want to bring in some contractors to give you estimates on the fix up work. After looking at several homes, you'll start to feel more comfortable with estimating the fix up work involved.

Inspecting a Mobile Home Part I

Before you decide to buy a mobile home, you will need to make sure you have taken the necessary steps to inspect it throughly - inside and out. Know what you're buying before you make the purchase.

Most of the information about the home can be obtained before you even leave your doorstep. When talking to the seller on the phone, here are a few questions to ask that will help you decide whether or not you want to take the trip out there to inspect the home:

1. How old is the home?
2. What is the size of the home?
3. How long have you lived there? (If they have lived there less than 3 years, usually I find the home to be in poor condition)
4. Tell me about the inside of the home. Is there any fix up work involved? How is the plumbing, electrical, a/c, etc?
5. Do they have pets? What kind of pets?
5. What known issues have you had? Have you done any repairs lately?
6. Tell me about the outside. How's the roof? Have you had any leaks? When was the last time you replaced the roof?

Ask as many questions as you can beforehand. Depending on how much fix-up work you want to do, decide whether or not you want to proceed. (If you are new to the mobile home business, I highly recommend going out and inspecting as many homes as you can just for the experience).

Before going out to the home, be sure to wear comfortable clothes and the appropriate footwear. (No open toed shoes here!) If the home is located out in the country, sturdy shoes or work boots work well as there may be mud and/or dirt terrain. Also, I've had to spray on a coat of insect repellant when going out to the country. One last thing, be sure to bring a flashlight just in case there are some hard to see places. Last of all, you want to bring a notebook and pen. Be sure to jot down all your notes during the inspection!

When you get to the home, greet the seller and pay attention to everything. Let the seller do most of the talking - you'll be surprised how much you'll find out about the home by just listening and observing.

Personally, I like to start on the inside of the home. Let the seller walk you through. Again, let them talk. The seller will probably have some stories to share with you about the different areas of the home. Be sure to ask a lot of questions. Remember, you are the one with the most interest as you are the one buying. Act as if you were going to live in the home yourself. (If you are going to live in the home, the more you need to be diligent with your inspection).

Usually, the seller starts in the living room area since it's closest to the entrance to the home. Pay close attention to the ceiling - are there any water spots? Ask if there have ever been any leaks. Also, look at the carpet. What is the condition of the carpet? Any water damage? If so, ask what the seller plans to do to fix it? Look at the walls. Are there any holes or patches? Point out anything to the seller that may look like it needs fix-up work. Ask the seller what they plan to do. Will they fix it? Or, are they willing to give a discount if you take it "as-is?"

Next, the kitchen is usually the next area since its often near the living room. Check all appliances - refrigerator, dishwasher, etc. Make sure they are all in working order. Ask the seller which appliances are staying and which ones they are taking with them. Check the plumbing. Run the water and make sure there are no leaks under the sink. If there is a leak, point it out to the seller and ask how long it has been going on. If you see a bucket or small bowl underneath the sink, it's a red flag. There may have been plumbing issues for quite some time. Again, ask the seller what they will do to fix the problem.

After going through the kitchen, the seller will probably take you down the hallway towards the bedrooms and bathrooms. On your way, check the heating and a/c unit (if applicable). Find out the make and model as well as the age. Is it the original unit that came with the house? Or, did they replace it? When was it replaced? Have there been any issues with the heating and or a/c unit? If so, what are they and what will the seller do to correct them?

If you see a laundry area when going down the hallway, ask the seller whether or not they will be taking their washer and/or dryer. Usually, sellers do take their units with them but there are other times they do not. If you are able to buy the mobile home with the washer and dryer unit, it adds value.

Next, view all the bedrooms. Again, pay attention to the ceiling and carpet looking for any watermarks. If you see any watermarks and/or water damage, point it out to the seller and ask how it got there. What will the seller do to fix the problem? If not, are they willing to discount the price? Look inside all the closets. Make sure all the lights work. Look underneath the beds and behind furniture to make sure there are no hidden holes or damages to the floor and/or wall.

Once you've inspected the bedrooms, you're off to inspect the bathrooms. Again, pay close attention to the ceiling and carpet (if any) looking for any water spots and/or damage. Flush the toilets. Make sure they are working properly. Run the tub. Run the water and check underneath the sink to make sure the are no leaks. Again, if you see a bucket underneath the sink it is a red flag. There has been on going plumbing issues here. Also, check the cabinet underneath the sink. Make sure the wood is sturdy and it is not rotting and/or coming apart. Usually, this is the case with particle board wood and/or wood that has water damage (i.e. leak from pipe).

After you have inspected the inside of the home, make sure you have written down everything you have noticed. If there is a back door, open it and make sure it works. This will take you outside and you will be ready to inspect the outside of the home.