Hi, this is Robert Woodruff with The Keys to Cash Flow. Thanks for joining me today. What I’m going to do is I’m going to discuss today the 10 most frequently asked questions about mobile home investing. Now after we get done covering that we’re going to cover the 10 most important questions you should be asking but you don’t know to ask yet. I know how to ask those questions so we’re going to go ahead and cover them all today. Hang in there. Fasten in your seats. Let’s get started.
1. What is a mobile home good for?
A. Why would we buy these things? They’re these things people live in. They’re undesirable. They’re off in bad neighborhoods. I wouldn’t want to live there myself so why would I want to buy one? Well here’s the answer. Mobile homes are good for cash flow. I know everybody that gets started in real estate investing often try to do flipping because they want these big paychecks but the big paychecks, they come and they go. Cash flow doesn’t go anywhere it stays there for a long time and it’s the way you obtain your financial freedom. So the more cash flow, the more mobile home investments you have, the more assets you acquire means the more post office paychecks you’re going to have that are coming into your post office every month. So, that’s why mobile homes. You do mobile homes for the cash flow alone.
2. Do I need money to get started?
A. No. You do not need money to get started in mobile home investing. The biggest myth ever and some of the worst talk you can hear from some of your peers or your fathers, your grandfathers that you got to have money to make money. That’s a self-defeating prophecy. You do not. If you don’t have time then you need money but if you don’t have money then you just need a little bit of time. Put forth a little bit of effort to go out and find some deals, wholesale some deals, help out some sellers some motivated sellers who need help and pocket thousands of dollars. Take that money and put it into your assets and keep doing the same thing over, over and over again until you have enough to acquire your financial freedom. Easy enough, right.
3. Do I need a dealer’s license to be a mobile home investor?
A. No. No you do not. Now if you ask a dealer this they’ll say yes. Yes you do. Just like if you ask a realtor if wholesaling properties is okay. They might say its illegal, okay. You do not need a dealer’s license to be a mobile home investor. Now if you’re selling, or flipping a certain amount of mobile homes every year you’re going to qualify for needing to get your dealer’s license but if you’re just dealing the properties or using them as rentals you need not have your dealer’s license. Okay.
4. Can I rent mobile homes and mobile home parks?
A. Yes you can but the number one mistake I see mobile home investors do is they’ll pick up the phone and call all the mobile home parks in their area and they’ll say, “Can I rent a mobile home in your park?” You know what they’re going to say? “No because I don’t want the problems of you coming into my park and doing a rental agreement with somebody and then your tenant thinking what’s in your rental agreement is more important than what is in my lot agreement. You understand? That causes problems. So just by picking up the phone and calling around asking everybody if you can rent in their park shows that you don’t know what you’re doing. Don’t do that. Don’t do it at all. Can you rent in parks? Yes. If they tell you you can rent in their park go ahead. Just don’t ask them. Rule of thumb, don’t ask them.
5. Will a mobile home appreciate in value?
A. Well the Manufacturing Housing Institute says yes. Bob says no. No, not at all. The longer you own a mobile home the less its worth until eventually one day it’s going to hit a value that that’s just what it’s going to be worth. That’s going to be the maximum value that you can get for the home in your area. Now other than that can they appreciate? In theory, well if there’s mobile home parks in Florida where mobile home junkers go for $10,000 a piece but yet there’s mobile home parks in South Carolina where the mobile homes go for $500 or even free obviously there’s a difference in value being the different areas. So now all of a sudden if South Carolina real estate switched to be like Florida real estate well in theory then a mobile home could appreciate but does a mobile home appreciate? Generally, no.
6. Should I buy a mobile home that needs to be moved?
A. Generally, no. You don’t want to do that because if you have to buy a mobile home and it has to be moved then not only are you paying the amount to purchase the mobile home but now you’re also paying for the amount for the mobile home to be moved. You really don’t want to do that. That could make your numbers bad. You’re adding all that extra expense into purchasing your mobile home what that means is it’s going to take twice as long to get all your money back that you have invested into your mobile home. Do you want to wait 2-3 years before you actually make a buck or do you want to make it now? Do you want to do it in 6 months, 12 months, what do you want to do?
Now in The Keys to Cash Flow the rent to own mobile home course, it’s my course, I teach you how to get a mobile home moved for free. That’s right. Or you can still go out and buy a mobile home that needs to be moved and use a different strategy where somebody else will be paying to move it instead of you and you’d still be able to sell it and make some money. Yes, there are ways that you can buy a mobile home if it has to be moved and still make it into a deal but by general knowledge if you’re going to go out and buy a mobile home that has to be moved it’s going to increase the cost of moving it but it’s just to the point it’s not going to be worth doing the deal anymore.
7. What kind of financing is available?
A. Generally, not much if any. Okay. Nobody’s really wanting to finance mobile homes. When you get a whole bunch of mobile homes and you go into the bank and you say, “Well I’ve got a bunch of these mobile homes that I’m going to use as collateral towards something else.” No, the banks will not use them as collateral. Really a mobile home, what it’s really worth is how much money is it getting in every single month. So that’s the true value of the property, how much money does it get and beyond that the banks really don’t care how much it’s worth. It’s a mobile home. It’s a wobbly box. That’s the way they look at it. Banks will not refinance them and a lot of them have a hard time even giving you financing on them. If you go into a mortgaging officer they’re not going to be able to do it. You need to go to a branch bank. So a branch bank might do it for you or there’s actually smarter renters out there called private money lenders. Now when you start getting involved in being a mobile home investor other investors see what you’re doing and they’ll say, “Wow, there’s some really big numbers there. Why don’t you let me give you the cash to go ahead and fix that deal and put some money in it.” Well that all works out great. You give them a better interest rate than they can get any place else bar none and still have a great deal on your hands. If you can give someone clear up to 15% on a 12 month or even a 3 month then that’s amazing. Now imagine if you had your deal with them where they were making 15% every 3 months imagine if you have that with them for a full 12 months that could be up to a 60% return per year. Who offers that? Think about it.
8. Single wides or double wides?
A. Single wides. Double wides are double the expense. You think, “Oh, if it’s a double wide is it going to be double the amount of money I get for it?” No not really. Often what’s going to happen is double wides are going to have a mortgage payment on them. So every month there ain’t nobody paying you, you have to pay somebody. That’s not a good idea, okay. Stay away from double wides in parks, there no good.
9. Can I buy mobile homes, no money down?
A. Absolutely. Here’s the neat thing about mobile home investing is that there are people out there that are having really big problems with their mobile homes right now, okay. Maybe they got to move out of state, maybe they got behind on their payments, maybe they have to sell it now and they have to move someplace else, well you don’t see a whole lot of realtors listing mobile homes. Their only choice is to go to the dealer and see if the dealer will take it back and do you think they are? No. No they’re not so here’s what happens, it either sits there and it gets taken back by the bank or they try to rent it out to a family member who will end up shagging the place out or you know just a number of negative things that will happen there. So really the only help that they have is you and me. We’re the only ones that cater to this stuff. We’re the only ones that help them. So you can make a lot of money just solving someone’s problems buying mobile homes, no money down.
10. How old should the mobile homes be?
A. Well, I spoke earlier that we don’t want this huge bill looming over our heads because the longer it takes us to pay off the mobile home the longer it’s going to take for us to actually get any money off the deal. Generally, you want a home that’s really close to being paid off or is already paid off so that you can start reaping cash flow off the property immediately. So what you’re looking for is probably 15,20 year old mobile homes but of course we said no double wides so keep it to single wides and that is your honey hole properties.