Mobile homes are the only affordable housing left for
many people in this country. But even so, the new mobile homes are priced
way out of the range of many people who need to buy a home. High prices,
and the lack of financing are creating a tremendous demand for used mobile
homes with seller financing.
There’s a world of people who want to buy things.
But, as many of them don’t have any financial discipline, the only way
they can buy what they want is to find someone who is willing to offer
financing. And this is especially true for housing. Some people will never
save $1,000, but, if you set them up on a monthly payment plan, they can
make you a payment for life. Let me illustrate by sharing one of my actual
deals.
A 96% Yield
This couple owned and lived in a 14 x 64 single-wide
mobile home that was 16 years old. They were moving out of the area and
needed a quick cash sale for their home. After being assured by the park
manager that the home could stay on the lot, I bought that home for
$3,350. I spent $132 for advertising, so I now had a total of $3,482
invested. The home sold in 17 days for $7,900. My buyer paid $790 down and
signed a note for $7,110, payable $228.39 monthly, for 38 months, 12.75%
interest.
So, with a few hours of work, I’ve used a mobile home to create a
high yielding note, which has obligated somebody to send me $228.39 for 38
months. The face amount of the note is $7,110, but I only have $2,692 left
in the note. Run the numbers and see if that’s not a 96% yield. The 38
payments, plus the down payment equal $9,468. Subtracting my original
investment of $3,482 leaves a profit of $5,986. And this all took place in
38 months.
Do A Little
Work One Time And Get Paid For 38 Months
And here’s the part you have to really love about
these mobile home deals. Once I sold the home, my work was done. But the
buyer has to go to work every day, to earn the money, to send me a check.
And he gets to do it for 38 months while I can go fishing, or take a nap. This is an excellent example of how to make your money work for you, instead of you
working for your money. If you will learn and apply this concept, you
won’t ever feel the same about working a “job” again.
This is just one of many notes I’ve been able to
create over the past 18 years with used mobile homes. There was a time
when I could get excited about buying notes paying 15%-18%, but no more.
My typical “Lonnie Deal” starts at 50% and goes
up. And this is real world stuff, not fiction or pipe dreams. There might
be something better, but so far I haven’t found it. Mobile homes really
are “Money Machines.”
My financial tip: If you don’t learn how to make
money work for you, you will spend your life working for people who do.
And, I leave you with this friendly reminder: Never let the mail carrier
pass your house without leaving a check.
Happy investing.
LS
Publisher’s
note:
I first tried
Lonnie’s ideas in 1990 and have been using them ever since.
They do work!
Caution:
Before you blast off, consult with a knowledgeable CPA. You should know how you will handle dealer status (no capital
gains; all ordinary income), what type of entity you will use to hold
title (S Corp, C Corp, LLC, sole proprietorship).
And, remember Richard Reno’s idea: No property has a problem.
Its owner may. GR
