It is an honor for me to have the podium to help others with my victories as well as my challenges. This is a story of both.

I have told The Story of My 1st Deal many times to friends, family members, and on stage however I rarely go into the detail as I have below. Please enjoy the story of my very first dollar in real estate.

January 2002 | Mobile Home Investing beginning

While living with my college roommate Chris I discovered a real estate investing course that was created in the late 1980’s. At this point in my life I had no experience with real estate in any way but I loved the idea of rental properties and flipping real estate for 5 figure paydays. I finished the course in less than a day and needed to know more.

The course I read was not enough to satisfy all my questions and curiosity so I joined a local Real Estate Investor’s club located at Picadilly’s Cafe in St. Petersburg, Florida on Monday nights. I was impressed with this group and the level of wealth and cash-flow in the room. I vowed then and there to have Wealth and Freedom like these men and women.

The host of the meeting was a straightforward no-nonsense investor named Larry. Larry was offering a mentoring course for the low cost of $1,295. At this time $1,295.00 took me 2 weeks to earn at my 2 jobs – but I can say with complete sincerity that I paid this money without fear of loss. I knew that I needed help and 1-on-one training from an experienced mentor so I picked the best one I could find with a successful  and proven coaching track record.

While working with Larry I followed his audio CDs and did what he instructed. For the next few weeks I mailed postcards, knocked on doors, visited pre-foreclosures, stuff and mailed letters, made offers with Realtors, made offers on my own, ran newspaper ads, and more. All this effort and money spent (I mean invested) without any offers being accepted or cash flow being created.

March 2002

Two full months and still my real estate career was gasping to take life. I was doing everything I was taught and was having a miserable time with no results.

The trouble I was having was not the education I was being taught by Larry, nor was my poor success due to my lack of effort . The problem I was having was finding a niche that I could expose and cultivate for my own. I not only wanted to be in business, I wanted to thrive.

In my area there were countless real estate investors and seemingly few properties to find for investment. I was a very small fish in a giant pond, as I was drowning.

Jack’s mobile home property

While at another real estate investing club meeting (this one located at a VFW in Clearwater Florida) I was sitting in the first few rows not knowing my business-life was about to significantly improve. Towards the end of the meeting some of the investors stood up and pitched their properties for sale. Jack was one of the last investors to go up and then began discussing the property he was trying to wholesale.

As Jack began speaking about his investment home I began to run the numbers;

• Description: 3/2 home on 2.5 acres of land
• Price: $43,250
• Financing in place: 1st mortgage approx $42,000
• PITI payment on 1st mortgage: $461.02
• Cash to close: $1,250
• Repairs needed: $4,000
• Potential Rent: $850
• Property ARV (after repaired value): $100,000 to $110,000
• 2.5 Acres of land in the country
• Then Jack dropped a bomb and told the group the home was a 1980 mobile home

To that date I had never even been inside a mobile home before. Does it really matter I thought? The numbers were solid and it was a place to live for someone.

The deal started to sound good, really good! The 3 bedroom and 2 bathroom mobile home he described needed only moderate cosmetic damages such as holes repaired in walls, paint, carpet, and landscaping. Best part the home came with financing in place (subject to a $42,000 1st mortgage fixed at 8% $461.02 PITI) so all a buyer would need to bring is $1,250 for the seller’s assignment fee to own this home. *Notice I did not mention closing costs. This we will discuss later.

I started to get excited but did not want to show my excitement to everyone. I remember calmly looking around the room and nobody was raising their hands to take one of Jack’s informational flyers. I remember walking right up to Jack as he left the stage and talking with him for 10+ minutes about his property and my eagerness to see it. One week later I purchased the property on Pawnee Way in Brooksville, Florida.

April 2002

Once the Deed was transferred into my Trust I got to work. I began working on the property by removing the existing carpet and repairing the subfloor of the mobile home. This I learned through a mixture of How-To Books and asking the workers at the Home Depot.

After spackling the walls, painting, updating some lighting fixtures, and removing 6 truckloads of junk from the home’s exterior I was ready to resell.

Realtor School

At the same time I was getting my investing career off the ground I furthered my education by successfully completing and pass the Florida Real Estate Board of Realtors, and the Mortgage Brokers Board.

Selling Attempt #1 for Mobile Home #1

My first attempt at selling the home was to owner finance the property by wrapping the underlying mortgage with one of my own. I wanted to accomplish this by first leasing the home to the right buyer for 12 months to verify timely payment history. If the tenant-buyers pay on time for 12 months I would continue to sell to them.

The sale would look like this:

• Purchase price: $43,250
• Sales price with seller-held financing: $135,000
• Incoming payments: $950 PITI potential payment from future tenant-buyer
• Outgoing: $461.02 PITI on 1st mortgage underlying from seller
• Repairs: $2,000-$4,000 I was doing the repairs myself
• Immediate profit: $2,000-$4,000 as a Down Payment from the new tenant-buyer
• Monthly cash-flow: Approx $500
• Remaining profit: Payable in 5 years when seller refinances the home

Advertising the Home

At the time back then, I began running newspaper classified ads and hanging bandit signs to promote my mobile home for sale,

** “No Banks Needed” 3/2 Mobile Home on 2.5 Acres of Land. Low Down Payment. Pets Welcome. **

Immediately calls began pouring in and I was overjoyed at the response. After just a few short days I had narrowed my choices down to 2 applicants.

Applicants A:

Husband and wife that wanted to owner finance for 12 months and then build a home of their own. After 12 months they wanted to refinance with a conventional construction loan and cash me out. Their credit was good as well as their job history. These applicants had $2,000 to put down on this mobile home. *Low Risk*

Applicants B:

Husband, wife and 4 kids living in their grandmother’s home because the couple were currently homeless (huge red flag). These applicants had $2,000 to put down and promised me another $2,000 when their tax return came in. The husband was currently unemployed and the wife had just started a cashier job a few towns over. These applicants had numerous negative remarks and blemishes in the past and more recently as well. What this family did have in excess was a sob story and cute children that I felt very sorry for. *High Risk*

The choice may seem obvious as to which is the more appropriate buyer applicant. Instead of making a rational business decision with my head I made a naive choice to give “applicants A” a second chance in life. Plus this choice would mean I profit an additional $2,000 when the tenant-buyer’s tax return was paid.  Without my mentor Larry’s consideration I rashly choose Applicant B.

2 Bounced Checks | Great and painful learning lesson

That’s right. The $2,000 down payment and the first month’s payment check both bounced. My heart sank, then began to race. I then started thinking about the potential troubles this may bring.

• Would these buyers pay me the money they promised?
• What was my recourse if they did not pay?
• Could I believe them that this was "just an accident"?
• Was I being fooled and played as an idiot?
• How do I evict someone? What does that cost? Who can I call?
• Is my home in danger?
• Do I have the correct hazard insurance?

June, 2002

To this date the only money I have received from these terrible tenants was the $80 for the application fees. No payments were ever made after the 2 bounced checks. Little effort was made on the tenant’s side to contact with me to resolve the issue.

After posting a 3 Day Notice on the tenant’s door we talked to each other over the phone and negotiated the terms for the tenant to stay in the home until the end of the month and leave the home just as spotless as it had been when they moved in. At this point I was just happy to be getting my property back.

The tenants were out a few days before the end of the month.

Selling Attempt #2 for Mobile Home #1

List the property on the local MLS for a cash or conventional buyer. My main goal was to bring in cash-flow but a quick cash influx would be useful to help build my “cash-flow” business.

Once on the MLS the property was under contract in just 3 days at $95,000. The buyers were investors that planned to remove the mobile home and build a large SFR on the 2.5 acres. The buyers were paying cash and we could close in as little as 2 weeks.

Child Support Lien on the Property

While my buyers and their Title company were performing their due diligence they found a roughly $5,000 Child Support lien from 1999 attached to the home.

At the time I purchased the property I did not have a professional Title search pulled. I did what is called a “Table Closing” with Jack. This is never recommended to do with real property. Always order a professional Title Search and Title Insurance to know what you are buying.

Closing

The closing went smoothly and I walked out of closing with 2 checks; one for exactly 35,000 and another Realtor commission check for $4,110.

That night I went out and celebrated with friends, family, and loved ones.

My tax implications on the $35,000 were at short term capital gain rates.

The main bullets to consider for your business are:

• Be happy to invest in a proper mentor to help you succeed faster.
• Follow your business-head and not your Heart when it comes to business decisions.
• Always use a local Title company, Escrow company, or closing Attorney when purchasing or selling any mobile home on private land.
• Disclose your daily business with your Mentor for ongoing input
• Start considering mobile homes as profitable investments in your area

Thank you for reading about my first dollar made in real estate. While I had this property under contract to sell I purchased my second mobile home – this time inside a mobile home park.

It is my sincere hope that you have received value in my education. The possibilities for income with mobile homes are real and available for the taking.

Love what you do daily,
John Fedro
support@mobilehomeinvesting.net

• Description: 3/2 home on 2.5 acres of land
• Price: $53,250
• Financing in place: 1st mortgage approx $42,000
• PITI payment on 1st mortgage: $461.02
• Cash to close: $1,250
• Repairs needed: $4,000
• Potential Rent: $850
• Property ARV (after repaired value): $100,000 to $110,000
• 2.5 Acres of land in the country
• Then Jack dropped a bomb and told the group the home was a 1980 mobile home