When he wrote this, he had received 36 payments ($8,222) with 2 left to collect. Once the home was sold, the work was done. He did a little work one time and got paid for 38 months.
A second deal: a bank’s repossessed home
A local bank had a “non-performing asset,” a mobile home. (The author’s view: anything that doesn’t perform is a liability.) His cost for the home, a month’s lot rent and advertising came to $2,850.
The home sold in less than a month for $7,500. The buyer paid $1,000 down and signed a note payable at $218.23 a month for 36 months. To see the yield, plug those numbers into your financial calculator.
Here’s what the author looks for and how he structures each sale:
- Homes he can buy for $2,000 to $3,000 and sell for $4,000 to $6,000.
- Single-wides 10 to 20 years old, already set up in a park, that can stay on the lot.
- A cash wholesale purchase, a retail resale and seller financing with a reasonable down payment.
- A selling price at least double what he has in the home.
His average monthly payment is about $200, and the average note term is 36 months. Imagine doing one deal like this a month for two to three years and what that stream of payments could add up to. Results depend on your market, your buying discipline and how well your buyers pay.
Questions to ask before you buy a used mobile home
The deals above worked because the homes were bought cheaply and sold to buyers who could pay. Before you buy one to resell with financing, get clear answers to these questions:
- How is the home titled? Depending on the state or province, a mobile home may be titled as personal property (much like a vehicle) or as part of the real estate. That affects how you transfer it, how you secure your note and what happens if the buyer stops paying.
- Is the title clear? Check for existing liens before you pay anything.
- Can it stay where it is? If the home sits in a park, find out whether the park must approve a new owner, what the lot rent is, and whether there are age or condition rules.
- What condition is it in? Roof, floors, plumbing and heating repairs can eat a thin margin quickly.
- What does the local market pay? Know what similar used homes sell for with seller financing before you make an offer.
Rules for titling, selling and financing mobile homes vary by state and province and change over time. Some places require a dealer or lender license once you do more than a few deals. Check with a qualified professional where you plan to operate.
Common mistakes with mobile home paper
- Paying too much up front. The yields in this lesson come from buying cheaply. Pay retail and the numbers fall apart.
- Skipping the buyer screen. Easy financing draws plenty of callers. A sensible down payment and a look at the buyer’s ability to pay protect the note.
- Writing long terms on old homes. The author keeps terms short, around 36 months. A short note gets your money back before the home ages much further.
- Treating it as passive income. Someone still has to collect payments, handle late payers and sometimes take a home back and resell it.
For more on this niche, see mobile home notes.
