Mobile Home Park Investing Tips – 11 to 15

Our Weekly Mobile Home Park Investing Tips.  Along with comments from investors.  Enjoy!


Mobile Home Park Tip #11

Comment & Question from Prior Tips:

Hi Dave,

It’s always nice to see paperwork.  Thanks for sharing Sharon and Dave.

Is anyone doing “subject to’s” (taking over homeowner loans “subject to the existing financing”) purchase agreements with mobile home conventional lenders? If so, how is that working for you?  Any problem with Lender’s then calling the loan due?

I’ve taken over Lender loans subject to for years, but not yet done any on mobile loans.  Usually, the balance is too high, but I’m seeing a few opportunities now.

In Texas, unlike in Florida, where I began my mobile home buying, we get a statement of location instead of a title, which a seller could easily sign and hand to me when doing a “subject to” deal, so I felt secure and in control.  Not sure how best to handle a “subject to”  here or in situations where the title isn’t being handed to me.  Any comments and help from the audience will be appreciated!

Thanks Dave guys are doing a great job 



Thanks for the comments on the tips and you are welcome.  As far as your question, I have not been doing subject to’s on mobile homes but I know people do it from time to time.  I would be very cautious in doing this.  Hopefully our audience will have some other thoughts and comments for you.



How do you get Financing for Mobile Homes to Fill up Vacant Lots?

This is a question many people are struggling with right now and finding financing for homes to fill vacant spaces either to rent or resell is difficult, time consuming, and all out frustrating.

Even if you have perfect credit, try calling up the local bank and ask them for a $100,000 credit line to buy mobile homes that you are going to turn around and rent or resell.  I would estimate that at least 50% of the banks will not even look at it.  So what do you do?

When we had the tornado that wiped out about 40 of our homes in a small town in Texas we had buyers and had to get homes quickly and did not really want to tap into our personal savings accounts.  We purchased about 25 homes using OPM (other people’s money).  Who were these other people?

1.  We had a private source of financing and he agreed to loan us $100K to buy homes.  This money came at a price though.  About 15% interest.

2.  I went around to every bank in town and asked them for $50K in credit lines to buy homes.  What a frustrating process.  About 6 banks and only 1 taker for $50K and 1 for $35K.  However, this money was much cheaper (about 9% with a 5 year payback).

3.  Seller financing.  We did buy a couple of homes using seller financing.

By reinvesting the down payments and the homes we sold for cash we were able to hit our mark of buying the 25 homes and filling the park back up.

Over the years since, I have used the private financing aspect a few times and also received small credit lines from other banks.  I still have a credit line with the two banks that started it all and anytime I want to buy new or used homes I have this money to tap into if needed.

I think the key is that you have to start small… Maybe one loan from 2-3 local banks and then work your way up.  If you build a good relationship with the loan officers and banks you should have a great source of funding.


Mobile Home Park Tip #12

Here are some comments and great additional information from the prior tip from a fellow mobile home park investor… Bret.


Here are some ideas to share with regard to raising cash to buy mobile homes. Over the past 6 years we have purchased approximately 50-60 homes and this has been the key to generating good cash flow for our parks:

1) Family loans – this works especially well for older family members who would otherwise buy CDs or similar investments. We usually work in increments of $15K since this is roughly what we spend to buy and set up a mid 1990s home. We pay around 10% and pay back over 5- 10 years. I like to structure the terms so that the payment we bring in from the occupant is close to the loan payment we make to the family member (approx $300/ month).

I too have used these family loans.  The first 4-5 years I was able to work my way up to a $200K credit line with one of my relatives.  I paid 10% interest and he was very happy to be earning twice what he could in the bank.   I also found some private lenders (a couple of people that I had purchased their park and paid them off as agreed).  This netted me another credit line of as much as $500,000 to buy homes or even parks.  The interest rate was 15% but well worth having this additional funding source.

2) Credit cards – This method requires close attention to detail regarding terms and transfer fees, etc. Over the years we have accumulated 10 -12 cards with sizable limits that have allowed us to purchase many homes. We try to take the offers that give the lifetime interest rates – then you don’t have to worry about transferring the balance to another card after the teaser rate expires.  Our blended rate for all cards over the past few years has been around 4-5%.  One downside is that this can tend to lower your credit score – too many credit cards. One way to mitigate this is to use credit cards that are in your relatives names – then it does not affect your score. You can even give your relative a “spread”, ie pay them the 10 % described in item 1 (assuming the card rate is some lower number).

Great point with the credit cards.  I am sure many people have read my book on how I started in the business and it was through the use of credit cards and the teaser rates.  I used to keep a spreadsheet and see how low I could keep the blended rate.  At one time I had a couple hundred thousand dollars in credit cards with a blended rate of under 5%. 

You make another valid point about how the credit cards can affect your credit rating.  Even though you pay them as agreed, the higher the balance in proportion to your credit line will lower your score.  Not to mention that each time you apply for a new card, it can ding the score as well.  I too have amassed some generous credit lines and they are mostly in various businesses.  After the initial shock to your personal credit report after applying for these, they don’t show up on your personal credit report anymore as long as you pay them as agreed.

And finally I also agree that it is better to get the cards with the low rates that stay with the life of the cash advance.  You don’t want to pay 3% for 6 months and then see it jump to 18% without having a way to transfer the balance or pay it off.

3) 2nd mortgage on the park – last year I took out a 2nd note on a park that we owned for about 4 years. The strategy was to buy 10 more homes and increase the occupancy of the park just before doing a refi on the park (we have a 5 year call on the first note). The bank was happy to do the loan since we had a 4 year history and they used the park as collateral for both notes. Now I expect to get a stronger appraisal due to the 10 more occupied pads.

Excellent point.  Many investors do exactly this and it is probably the best way to go if the equity is there.

4) Here is one that I have not tried so am curious if it has worked for others: Report the payments to the credit bureaus for payments you are getting for homes you have sold so that the occupant can raise their credit score and then go out and get their own loan.  They would then pay off the loan you are making to them on the home which gives you cash to buy another home. This one might be a long shot but might be worth a try.

I think this may have some merit and it will be interesting to see if anyone else has tried it before.  If you ever go to sell the notes it should be a great plus especially if they have been making the payments on time and the note buyer can check the credit bureau. 

I have never tried this but have done something a little different a couple of times.  I had a bank agree to finance some homes to my residents and I stayed on as the guarantor.  I agreed to make the bank whole in case one of the residents would default and take the home through foreclosure and then resell it.  This worked well the couple of times I did it.

5) Sell the notes you create when you sell homes – again I have not tried this one yet but am preparing a package to be quoted by a note broker. You might need to season these notes for a year or so.

I know many people have tried this and it has worked.  I have sold a few notes to relatives and other associates and agreed to guarantee the notes.  I was able to sell close to face value.  If you are looking to sell to the typical note buyer, I have seen the discount to be around 75%.  I try to sell all of my homes to my residents without a huge markup so that they can build equity quick and have a reason to follow through.  I have not been willing to give up 25%.  However, it is a very viable option if you can find a good buyer and the notes have good seasoning.

6) Has anyone tried to work with Great Northern Mortgage? They advertise bulk chattel loans for park owners.  I started an exchange to get things rolling but they have been very slow to respond.

They have been advertising on our website for many years and I have not used them personally.  I have talked to them and heard a few success stories.  However, I have heard other cases in which they could not help.  If anyone has any experience on this we would love to hear it.



Mobile Home Park Tip #13

How to convince the seller to sell at your price

The first thing to remember when trying to convince a seller to sell at a 10% cap is to make him think that it is still a 7 or 8 percent cap or less.  The seller has no right to know your numbers — they are yours because you have taken the time and effort to learn them.  You are putting these numbers together to represent your best estimate of the income and expense you will incur when you take over.  You will not run the park the same way as the seller.  Therefore you base your decisions on these numbers (just as the Seller would if he were buying the park).

Once you have completed your diligence and have a tight, 100% accurate budget, you know what the park can really produce in cash flow.  Normally, this is much less than the seller told you.  Sometimes, in rare cases, it is higher.  In any event, to achieve your 10% cap, you are probably going to have to get the seller to reduce his price.

The first step is to “cook the books” yourself.  Look at any expense item that the seller gave you that is higher than what it should actually be.  Leave all of those numbers at the seller’s level.  Next, tack on some more expenses for the “grey area” numbers such as administrative, travel, and management.  And then add on a ton of proposed “essential” capital expenditure items, such as re-building the roads and utilities — even if you have no interest in ever replacing them.  You are about to enter in to a negotiation, and you need room for the seller to enact some negotiating.

Once you have all the pieces, arrange to meet with the seller.  Have a complete set of your numbers to show him (bring two sets).  Pick a neutral area to meet, like at a restaurant, so that you have his sole focus.  If you meet at his home or office, you may get constantly interrupted.

The first key is to get him in the habit of saying “yes”.  Go down the numbers with him, starting with the revenue numbers.  Start with easy assumptions like “the rent is $200 per month, right?”  And get him to say “yes”.  Get him to say “yes” many times before you hit the “increased” expense items such as administrative and capital expenditure reserves.  He may start disagreeing with you at this point, that’s only natural.  Be sure not to put a final tabulation on the sheet you have given him.  He’ll go straight to the bottom and know what you are up to.

Once you have gone down all the numbers, show him a second, new page.  This one will have the totals and also the amount of debt these numbers will support.  Use the bank as your negotiation weapon.  Tell him that you would like to pay him more, but the bank will only loan so much based on the real numbers.  Explain that whether he sells it to you or some other guy, the numbers will still be the same and so will the banks loan amount.  Hopefully you have left some “wiggle room” in these numbers.

Continued on next tip, be sure to watch for it.


Mobile Home Park Tip #14

How to convince the seller to sell at your price…Continued

With the ball in his court, four things may occur: 1) he storms out of the room 2) he says the price is firm 3) he agrees to your price or 4) he agrees to a lesser price but not as low as yours.  If he responds with option 1 or 2, and your diligence shows that at the asking price it is less than a 10% cap, then you need to move on the next deal.  If he goes with 3 or 4, then you are still in the game.  Now the test is whether or not this new number he has proposed will give you a 10% cap (remember your wiggle room).  If it still does not yield 10%, then you have four possible options 1) walk the deal 2) tie it up anyway and try to renegotiate him again during the examination period 3) propose that he carry the paper to avoid the bank’s limitations (this is my favorite) or 4) ask him to take a 0% interest second lien for some period of time.

Remember that you have a second shot at negotiation during the due diligence period.  Sign him up, even if the deal needs fine tuning now, and then re-approach him during the exam period.

The worst thing you can do is put him in a “I’ll think about it” funk which will waste your time with perpetual follow-up calls.  A firm “no” is way better than a weak “maybe” that goes on for years.


Mobile Home Park Tip #15

Protecting Your Mobile Home Park Investments: Setting up an LLC

As you go about finalizing a deal on the purchase of a mobile home park, you need to take into consideration whether or not you want to set up a separate business entity through which you will own the property.  In this regard, an ever growing number of men and women who are investing in multi-family properties today are setting up limited liability companies in order to provide a vehicle for ownership of their investments.  Through this article, you are provided with an overview as to how establishing a limited liability company or LLC  can be a positive step when it comes to mobile home park real estate investment.

Men and women who have extensive experience are now nearly universally setting up a separate LLC for each of their mobile home parks or other types of real estate investments.  There are a number of reasons why they are taking this approach.

First, an LLC is very easy to establish.  In most states, you merely have to spend a few minutes online to set up an LLC.  And, the annual fee associated with an LLC really is minimal in the vast majority of jurisdictions.

Second, the annual filing requirements associated with an LLC is very simply to complete.  Unlike a more traditional corporation or a Sub Chapter S corporation, the paper work associated with an LLC almost is non-existent.

Third, an LLC will provide you with liability protection in regard to your mobile home park residential real estate investment.  In this regard, if some sort of liability issue arises in the operation or ownership of the real estate investment, an LLC will protect your personal assets from attack in such an instance.

Finally, there are some tax benefits that you might also be able to realize through the establishment of an LLC to deal with your ownership of a mobile home park.

If you have any additional questions pertaining to your mobile home park or other multi-family real estate investment and the benefits and protections that can be realized through the establishment of an LLC, you should consult with a qualified attorney with experience in the real estate arena.  A reputable lawyer can assist you in making certain that you do everything you need to undertake to get your LLC in place and to keep it up and running from a legal standpoint into the future.


To see a list new and used mobile home dealers.
Click Here

To view the newest Mobile Home Parks for sale.
Click Here

To get a fast quote on Mobile Home Park Financing.
Click Here

By Dave Reynolds and Frank Rolfe

Dave Reynolds and Frank Rolfe are mobile home park investor and together own and operate over 100 parks. Frank also leads regular Mobile Home Park Investing Bootcamps through