New to the site and need some guidance

[TJS]

First of all let me say thanks to John Michael and Dan Auito, for the free ebooks (Johns hard money book, and Dans 270 pager, I have been reading those for a solid week now)

Little background on myself, I am 27 years old and have been appraising real estate for 7 years now so have been interested in the real estate field for some time, just afraid to take the plunge so to speak. Well within the last 6 months my dad calls and wants to take the equity in his house and start investing in real estate. So to make a long story short my dad, brother and myself formed a company with the intent to start "real estate investing". Seems like I have been doing most of the leg work (which I dont mind), my dad said you take the money and do what you want with it. So my brother and I have access to 75K, but my brother (who is 23) travels in/and out of state for his job, and usually is only home about 10 days out of the month.

But than we got together the other day and they drop the bombshell on me that they want to " start with mobile homes (preferable Doublewides) and rent them out"? Would this be a way to go, mobile homes do not appreciate at all, at least not in my area, and if they do it is very little. Just didnt want to say anything to them because they seemed intent on going this route. I just dont like it.

I have been reading alot about rehabbing and the thought of that has intrigued me. But I also like the process of looking into "preforeclosures" going that route.

Any help here would be appreciated and welcomed.

Again Dan thanks for the site, and although this is my first post, I have been a frequent visitor over the last month just reading!

TJS

[REIaddicted]

Lonnie skruggs has a MH book that is great. You might pick him up.
Lisa

[Dan Auito]

TJS, with that appraisal background you will be well armed to judge values in your neck of the woods, if you've been practicing your trade where you now intend to invest then look for the opportunities wherever the market tells you they are. As an appraiser your Dad and transient, I mean travelling brother should be listening TO YOU!

Mobile home men buy insanely cheap and rent them out for cashflow or flip for quick profits to owner occupiers, they aren't banking on long-term appreciation unless maybe they own the whole park or good pieces of it. (sometimes on land contract to their tenants etc..) Those comments my friend are pure conjecture based on what I have read, I have not done mobiles but one day may just to add another income stream.

TJS I wouldn't rule them out, get your dad the Lonnie scruggs and or Jerry Hoganson courses and make him and your brother read in their spare time, sounds as though they are laying everything on your back, I can see your dad sitting back a little but that brother isn't even going to be around.

Glad you came out of the bleachers and have gotten into the game, it's more fun on the field! :SM128:

[Spike]

If your going to rent out mobile homes and be the landlord,you should find a mobile home parts dealer in your area.You cant always go to Home Depo to find the parts you need to fix them.
One more thing:I would go to Home Depo to get a Watchdog.This is a little alarm that you set inside the water heater closet.If it starts to leak,it sets the alarm off.If you have ever had to fix a bad floor in a MH,these things are life savers.BTW,they are around $10.00 each and well worth it.
Hope this helps.

[CharleyB]

TJS;
Your intention to invest in mobile homes sparked me to post something about a recent experience we had here in Georgia on that very issue.
My wife and I own a small farm here in southeast Georgia. We have a well and septic system on a portion of it so we leased a spot to a couple that had purchased a very expensive double wide and needed to live in this area.
They had been very good tenants for several years, paying rent on time, until last November. We discovered that the couple had signed a thirty-year mortgage on the home but the lender had "slid in" a cause where they could increase the interest rate if they chose during the course of the mortgage. That caused the monthly payment to more than double. The couple declared bankruptcy and abandoned the home. The court ruled that ownership reverted back to the lender. We have been unable to get the lender to remove the house. The local court has told us that if we want it moved we have to pay for it ourselves ($3,000-$4,000) IF we can find someone to store it. However, if we leave it there we don't have "clear title" to it so we can not rent it or sell it. We do have the right to charge the outstanding monthly lot rent to the lender if and when they decide to move it but we have found out that many other land owners and park owners have had them sit there for years without the lender even responding to their requests.
Our legal council has told us that adverse possession laws do not apply to mobile homes because they are not considered "real property" but only "chattle". If the tenants had left a car there we would have been able, after a time period, to sell the car for the storage or rent but this procedure does not apply to mobile homes.
We are stuck with no rent for as long as the lender chooses.
Conclusion: Be very, very careful as to "title" to mobile homes. They are a totally different animal, at least in this state.
Hope this helps you to avoid problems.
All the Best,
CharleyB

[REIaddicted]

Just thinking out loud here.. but please chime in... I don't have the capitol but I do have the locations and know the owner very well. ( DAN, not you auto.. the other Dan)

Say there is a 5 acre of raw land... I would have to dig my own well, put the utilities ( very easy county to deal with) put some high end MH on them. Do a rent to own with a large down and so much a month?

OR

Just sell off the 5 acre lots ? some $ down and so much a month? Let the tenent worry about placing the utilities and well on it?

This property is about 15 minutes from town, a town that is growing and has potential. It is the largest town within an hour of many smaller towns?


same owner, different town 3 hrs away has 1 acre plots. Just sitting there. Doing nothing :SM003:

Ideas?

[realestate]

TJS;
Your intention to invest in mobile homes sparked me to post something about a recent experience we had here in Georgia on that very issue.
My wife and I own a small farm here in southeast Georgia. We have a well and septic system on a portion of it so we leased a spot to a couple that had purchased a very expensive double wide and needed to live in this area.
They had been very good tenants for several years, paying rent on time, until last November. We discovered that the couple had signed a thirty-year mortgage on the home but the lender had "slid in" a cause where they could increase the interest rate if they chose during the course of the mortgage. That caused the monthly payment to more than double. The couple declared bankruptcy and abandoned the home. The court ruled that ownership reverted back to the lender. We have been unable to get the lender to remove the house. The local court has told us that if we want it moved we have to pay for it ourselves ($3,000-$4,000) IF we can find someone to store it. However, if we leave it there we don't have "clear title" to it so we can not rent it or sell it. We do have the right to charge the outstanding monthly lot rent to the lender if and when they decide to move it but we have found out that many other land owners and park owners have had them sit there for years without the lender even responding to their requests.
Our legal council has told us that adverse possession laws do not apply to mobile homes because they are not considered "real property" but only "chattle". If the tenants had left a car there we would have been able, after a time period, to sell the car for the storage or rent but this procedure does not apply to mobile homes.
We are stuck with no rent for as long as the lender chooses.
Conclusion: Be very, very careful as to "title" to mobile homes. They are a totally different animal, at least in this state.
Hope this helps you to avoid problems.
All the Best,
CharleyB

If its a mobile home that had wheels at on time its titled just like a car. Check to see if it has a title if it does I would file a Mechanic's Lien at the nearest DMV office. The moble home dealer should have a dealers license just like the car dealers.

[realestate]

I would like to do lonnie deals only take it to a whole new level. Where I live they have started a task force on abandoned mobiles.

The going rate they will pay to remove the homes is 2,500.00. Now if you got payed to remove them but instead of demolishing the home to the frame and hauling it to the dump.

Find or build a buliding big enough to drive the home into. An old metal building with big garage doors would be good. Then you could start salvaging what you need for homes you by, and sell the rest it would be a junk yard for mobile homes only you would have the homes striped off any thing reuseable and salvage the metal I beams at the metal salvage yard.

Then just catalog the rest and use it for your self or sell as parts. The deal here is if its funded at 2,500.00 per home removal and you reuse rather then haul off to the dump almost all of it is profit. And your helping the enviroment by not hauling it all to the dump.

[Jim FL]

Charley,
Instead of losing out on income completely, and since you have complete access to the MH.........just no control over when the lender intends to retreive their collateral......why not rent it out?
Sure, you cannot commit to a lease, or even a monthly rental agreement.
But, perhaps weekly rental, where you get a tenant in there paying weekly, cash, with the understanding, perhaps even in writing, that they must move right away upon 24 hours notice or something, disclosing the fact that the lender intends to repo it.

I know this sounds funny, but I bought some land about 3 years ago, with a MH on it, awaiting repo.
Same issue, it took the lender 11 months to get the thing off my land.
My attorney drew up a weekly rental agreement/disclosure form, and we rented it weekly.
It was a nice little extra til the bank took it away, and we even told them we were renting it out with a letter from my attorney.

I had never thought of doing so, and was not even sure we could until my attorney gave me the idea.
He's also an investor, and has been for YEARS, and does VERY well.
I think he practices law because he likes it.

Anyway, just something to run by your attorney and see if you can do this.
Better than letting it sit there empty, costing you money because the lender is slow.

Take care,
Jim FL

[Dan Auito]

Talk about a nuts & bolts approach ahy Charley? Dave I would say those ideas will work wonders on the top dogs mindset in short order, if not then the lot rent goes up,up,up!
Charley since the thing is there all hooked up and ready to go, see if the lender will sell it dirt cheap to you! (short sale)

If nothing else use it for a psuedo guest house, odds are family won't stay long if you put them in a bullethole riddled trailer with parts missing! :SM091:

In all seriousness I think you have a well written letter to send to a bank officer via Fed/EX. I look forward to hearing the follow-up or the fallout on this one. :smiley5:

[David Whisnant]

Thanks Dan!

I actually deleted that post because I want to give a little more step-by-step plan. Again, I'm not giving legal advice here, or forming an attorney client relationship.

I will also disclose that while my legal background is in real estate law, I have not had any manufactured home related work.

This boils down to goals.

You could rent this out, as proposed in the other post. However, there are risks/issues to consider.

a) If the property is damaged by your tenant, the lender may look to you to repair those damages if their hazard insurance company does not cover any such damage. If the hazard insurance company does cover the damages, THEY may look to you to cover those damages.

We redid a property that was part trailer, part house in 2004, and I can tell you that the trailer parts are really expensive and can be a little tricky to track down. In my mind, it is cheaper to fix a trashed house than a trashed trailer.

b) As with any rental property, you'll need good liability insurance. It may be a little tricky to get liability insurance on a property that you do not own. Not getting such insurance could be financially ruinous to you -- consider what might happen if the mobile home burned down and occupants were killed, or if a violent crime happened on the property and they alleged that it was due to your negligence. The right side does not always win on suits like that. Remember that the mobile home insurance market is smaller, so getting the coverage you want is not as easy on traditional single family homes.

c) You CAN get the tenant to agree to a month to month situation, but bankruptcy laws can really get around your best intentions here. If your tenant declares bankruptcy, that may delay your ability to get him out of the trailer. We have pretty fast evictions in GA, but I went to a bankruptcy cle (continuing legal education) recently, and the real world ability of the tenant to stay in the property without paying for many many months was discussed. In that case, you may be liable to the lender for any additional depreciation. You also run a higher risk of property damage since there will be personal issues along with the monetary issues typically.

If you are entitled to the lot rent, it would be worth an hour of a local attys time to find out:

1) If you are entitled to lot rent.
2) What the max you can charge the lender is.
3) What your remedies are if they do not pay.

Sorry that I do not know the answer to those q's without research.

You may be able to make enough on lot rent to be happy leaving it on your land. It seems to me that if you can get lot rent, you are in the same position that you would have been in had the people stayed.

Now, let's look at making money on this jewel:

1) Figure out what it is worth. Not to a consumer, but wholesale back to a mobile home dealer. Include any moving costs in that figure. Just call some dealers and let them know what you have. Make sure to tell them if it is attached or not to the land.

2) Get a straight option for the wholesale price less a few thousand. Give the lender $10 as the option premium. Again, you would send that directly to the president in a FedEx.

3) You can then advertise this unit, and try to find a retail buyer who might want it, OR just wholesale it back to a dealer who would take an assignment on the option and get it off of your land. You'll make more money selling to a retail buyer of course.

Let's say that you just want it gone:

Remember that the above strategy can help you get rid of it. Otherwise, do the following. If you're going to do the option play, you want to do that BEFORE you get into this.

1) Write a letter to the president of the lending company. The head person. You can find out from the company who that is. This letter MUST be sent FedEx. That will ensure that it gets through the secretary and onto his desk.

2) Relate the story of what has happened up until this point, and demand firmly but nicely that they remove the trailer within 30 days.

3) Tell them that you are concerned about the liability of having a vacant dwelling on your land that is not secured, and that you are also concerned about the safety of the mobile home, since it could easily be damaged by vandals or teenagers.

4) Inform them that the lot rent is $X per month, and how you expect to be paid.

Your tone is nice on this one!

During that 30 days you'll do the following.

1) Wait 5 business days for a response.

2) If no response, call the presidents secretary and leave a message every business day, and ask when you can expect the trailer to be removed. This is kind of like chinese water torture -- each small drop adds up to compel them to deal with you eventually!

At the end of 30 days, send them the option agreement (again!) and see if they will sell you the trailer for below market value to make you go away. Remember that the title to the mobile home and the security interest are one. They can just negotiate directly without all of that short sale paperwork.

If no response from that for a week, call again for the next 30 days regarding your offer. Send the offer again once per week via regular mail to the president. Call again and leave messages every day.

Finally, you need to do some guerilla action:

Send another FedEx to the president AND registered mail. This one is different.

1) Relate everything that has happened until this point, including offers you've made, contacts you've made, letters you've sent, the history of the property etc. Nice, neat and compact.

2) Tell them that since they are not willing to do anything, that you intend to rent the property out to the first person who is willing to move into it. Furthermore state that:

a) Unless you hear back from them by certified mail within 7 business days, you will assume that they agree that you can rent the mobile home out. Furthermore, by not responding, they agree to

1) accept any and all liability for damages that your tenant may cause.
2) indemnify you for all liability connected to the tenants residing in the mobile home.
3) Hold you harmless in the event the tenant cannot be evicted from the property for any period of time.

Furthermore, they agree that the rental amounts you receive are NOT to be credited against the lot rent due, and that any and all rental proceeds are yours.

I think that this should get things moving for you.

If not, you can go wild on them and use the tactics that I mentioned earlier. Tell them that they agree that you can part out the trailer, and that they will not hold you liable for bullet holes in the trailer due to hunters that you allow to hunt on your property etc.

Stay crisp and professional in your letters, and they should do the trick for you. You might even make some money!

I would be very cautious about just renting it out. If they left a car on the property, we probably wouldn't even think of renting that to someone. Remember, if you can get that lot rent, you're in the same position that you would have been in.

I sincerely hope that this helps you, and I wish you the absolute best of luck. Write to me here or on my site, and let me know how this works out!

Sincerely,

David Whisnant
http://www.4-real-estate-investing.com

[realestate]

I really belive if its a a mobile home that at one time had wheels its considerd like a car. What do you do with abbandond cars? tow them? Store them? If a towing company has someones car long enough they can and will get title by a Mechanic's Lien.

I really would check with the DMV. That way you get the trailer or your lot rent, plus the peice of mind of knowing somebody wont pull up for the trailer one day.

[CharleyB]

David;
Thank you so very much for your detailed reply.
Knowledge is power.
We have already taken one of your first steps in that we have sent a certified letter to the lender in which we demanded that they remove it and that we would demand lot rent at such time that they did. We received the return receipt a few days later but it was sent to the company headquarters and not directly to the CEO as you suggested.

In phone conversations with our county Tax Commissioner and Magistrate Court Judge I learned that a mobile home is NOT considered a motor vehicle nor is it considered real property, it is in a catagory, legally, all it's own. The Tax Commissioner said it is considered more like personal property but they are taxed just like fixed-place houses with an assessed value. I asked him if adverse possession laws apply if the taxes are not paid. He said no, that if we paid the taxes we would be in no better position of strength. He did say, however, that when the bankruptcy closes that he would receive a notice of change of ownership from the court and that was the time to start with the certified letters, or FedEx letters as you instructed.
He indicated to me that this problem is quite wide-spread in Georgia and it has become the bane of his existance. It seems that there are many instances where clandestine repo operations are occuring during the night where the lenders are just removing the units that are abandoned. There is a permit required to remove the unit from the county but they are often disregarded which leaves the county without the tax revenue.
He indicated to me that there is a relatively unknown legal procedure where an action can be forced, wake up the bear as you say, but it is somewhat expensive and time consuming. I intend to go out and take him to lunch so he can explain it to me in detail.
Of course I'll keep you informed through these boards so that this whole process can benefit others.
Once again my sincere thanks for your time in responding to this thread.
All the Best,
CharleyB
www.rockyfordinternational.net

[Dan Auito]

I'll second that notion Charley. Dave is a huge addition to the forum and it is so nice to have this new storehouse of experience on board. Folks please take a look at Davids courses to see if you would be interested in learning from a master.

Dave if you're reading feel free to tell us more about your courses from your viewpoint, this would very interesting reading as well. Thanks everyone! Dan :praise:

[REIaddicted]

David, thank you so much. This is much food for thought!

I know of someone that buys repossed mobile homes, places them in thier lot, sales them as rent to own and makes the tenants sighn saying they are responsible and will get insurance. She never actualy follows up on it... but she makes them sign it.

I kind of place her in the catagory of a slum lord because once she sells them the trailor.. the only time she does anything is to collect the $. Place is a bit run down to say the least!

Lisa