Today’s lesson: Understanding your sellers and being a happier investor
My real estate investing business changed forever when I began to see my sellers for what they really are; fragile, scared, vulnerable, friendly, and selfish human beings. As young children we rarely look to our parents with the attitude that these people are just as screwed up as ourselves. Perhaps a better way to phrase this would be to step outside the relationship that we typically have with mobile home and traditional real estate sellers, and realize that each is a unique soul with his or her own set of skills, ambitions, loves, fears, and wants. In this article we’ll logically walk through the three distinct types of private mobile home sellers. This is based on over 10 years of listening and communicating to mobile home sellers.
Before we discuss these 3 unique mobile home seller-types I must make certain you understand 2 key mobile home must-have mind-sets before making any offers to any seller.
- To all sellers — you should be their local mobile home market expert.
- Since you operate a business, you always know the MAX price you can pay for any mobile home in any park in your city. You must always make certain to stay below this MAX price. When purchasing mobile homes you MUST always know in advance what price a mobile home should sell quickly for in that city via all cash and/or seller financing payments. You can then use this re-sale information to help make certain you recoup any investment costs to acquire the home as quickly as possible.
Below are the three stages any mobile home seller may go through given enough time has passed with their property for sale on the market.
A. Top Priority mobile home seller:
These sellers are ready to sell to the first buyer with a pulse. These sellers are willing to hear most traditional and creative offers you have for them. Their total asking price should already be at or below your MAX amount to pay for this mobile home. These sellers DO have some type of external motivation that is making it necessary to move within 0-30 days; they will not last long. These sellers make up approximately 10% of the market, however this number will seem much lower because most Top Priority sellers sell their homes before you ever knew it was for sale.
B. Middle Priority mobile home seller:
These sellers make up approximately 50% of the market in your area and want what they believe is a “fair-price” for their used mobile home. These sellers are generally newer to the market place and do not understand that with the lack of cash-buyers, their home is typically worth much less than they may have previously paid. These sellers on average have between 3-9 months worth of financial capital and time to wait for their unwanted home to sell. The asking price for this home should be between 1.1 to 4 times the MAX amount you can pay for this mobile home. Many times these sellers will list with a Realtor, continue slowly dropping their price, and/or become more flexible as time passes without a sale.
C. Low Priority mobile home seller:
These sellers are asking 5 or more times the MAX price you would offer for this home. In situations like these you know you will not likely be purchasing this seller’s home unless they drop their price an ‘unrealistic amount.’ These sellers are of the lowest priority because there is little help you can provide as an investor. These sellers are usually in great financial shape and can wait years until their beautiful home sells to the right buyer.
On the other side of that same “Low Priority” coin some sellers may be on the brink of foreclosure as their property is leveraged to the hilt with an ugly loan/mortgage. Many times as investors our best duty for these sellers is to offer the help of a licensed agent, loan modifier, or short-sale specialist to assist in the sale. “Low Priority” sellers make up approximately 40% of the mobile home selling market inside preexisting mobile home parks.
Looking logically at these three stages of sellers we can reasonably assume that over-time if a “Middle Priority” seller cannot sell their home (with no liens), this seller will lower the price and/or terms until the home sells to a buyer or investor. In a future article I will be discussing the obvious and not so obvious benefits to following-up with sellers repeatedly.
And you’ll find that a temporary no is just that, temporary.
Love what you do daily,
John Fedro
support@mobilehomeinvesting.net
Thank you! This was in depth and fantastic information for someone ‘testing the waters’ to get started in mobile home investing!
Hi Debbie,
Very happy to help. I hope this article and video has provided you value.
All the best,
John Fedro
I’d love to see you in action during a negotiation!
Doug
Hi John,
Great video! Thanks for taking the time to really give a beautiful, passionate, and in depth look at a portion of what you do! I have signed up for your newsletter, as well as listened to your podcast on BP. All good stuff. I’m in the research phase while I build some Capital to invest. And by “research” I mean talking to a park manager about potential investment properties in her park, as well as devouring every single piece of information on the subject I can, from Deals on Wheels, to Rich Dad education mobile home webinars, to BP podcasts and forums, and anything else I can get my hands on. I’m currently reading RIch dad Poor Dad(re-read) next is Cash Flow Quadrant, followed by Think and Grow Rich, and lastly How to Win Friends and Influence People(re-read). My question is, along your path were there any other great sources of education or books to read which you would be willing endorse? Investors like yourself who are so willing to share your insight are a true blessing to a new one just starting out such as myself. Thanks again for what you do, and have accomplished.
David S
Hi David,
Thanks for reaching out and commenting. I am happy to hear you are interested in this type of investing moving forward. Additionally, thanks for the kind words about this site. It certainly has been a labor of love. Great to hear about you being a sponge for all info on MH investing. If you have any questions never hesitate to reach out to me. If I can help, I will try.
Concerning your question much of my education is from investing over the last 13 years, making many successes and failures, investing in multiple states, calling other states for info and laws, etc. However there is not much literature, comparatively on the subject of MH investing. With that said I love “How to win friends and influence people”. I aim to read this book yearly to remind me why we are in business. With that said for me personally, I got a huge amount of general investing help and investing knowledge from rubbing shoulders with very experienced investors and trainers weekly. A mastermind group and myself, of which I was the youngest by 3 decades, all met up on Friday nights to talk real estate. I learned so much through osmosis and asking questions. Perhaps this is one reason I enjoy teaching so much, to repay what these great men and women taught me. Sorry, my answer on books is not too helpful. If you have any follow-up questions please do not hesitate to reach back out.
Talk soon,
John
Thank you that answered some questions I had!!
Would it be hard to impossible to find a loan modifier or short sale specialist for a ’95 double-wide? Where do I even look for that?
Hi Dawn,
No, I do not think this would be hard at all. Most bank don’t wants their loans to default, nor do they wish to take back a property. So if there is a way to keep someone in a home they may work with you. If you contact the loan servicer or lender that is holding the loan then anyone with authority from the mortgagor (using an authorization to release mortgage information sheet) then you can obtain a short-sale package yourself. However the loan must be past due in order to request a modification or short-sale. As far as finding someone to help you, I would contact your local REI club if you know where this is located, or perhaps Google “Short sale in ___my city___” and see who’s name pops up. If you hire someone to help you then this service may or may not cost you any money.
I hope this helps. If you have any follow up questions don’t hesitate to reach back out.
Best,
John Fedro
Great video! It was very informative and helped me identify a lot of the potential sellers I spoke with. I’ll do as you say and follow up with them! Thank you!
Hi Angie,
Thank you for your kind words and commenting. I’m so glad that this video has helped you already. If you have any additional questions or concerns never hesitate to reach out to me.
Talk soon,
John
Great info john, what are your favorite states to invest in??
Hi Frank,
Thanks for reaching out and commenting. Interesting question. Mobile home investing is a bit of a numbers type of business. The more inventory you have around you the more possible opportunities you have to help local buyers and sellers. With that said I am helping folks in extremely rule areas and in folks in major metropolitan cities. The difference between these two investors is that the investor in the more rural setting may have to drive a further distance to find 100 mobile home parks. With that said I am not a frayed to have a large radius while investing so almost every area of the country besides Washington DC and Hawaii are plausible and good areas to invest in. Other concerns may be how many cash buyers are in the area; in coastal cities we are finding that we often times have to drive inland to find mobile home parks with adequate lot rents and a lower demand of cash buyers. With all that said these are just minor stumbling blocks and any ambitious investor can certainly overcome these. The two main states I’m investing in our Florida and Texas, however this is only because this is where I live.
After all that is set I don’t know if I actually gave you any specific locations that are my favorite areas. In reality if I was dropped off naked and without any money in any area of the country I would work a bit to generate some money and then start investing in mobile homes no matter where I was. I hope this helps and makes sense. If you have any follow-up questions or concerns never hesitate to reach back out.
Talk soon,
John
Great video, thank you for sharing that with us. I’m a school teacher and I’m considering buying your education program. Should I wait for the summer so I can work on it as much as possible while I’m off work or should I invest now in order to be ready for the summer time rise in sales potential?
Hi Ashley,
Thanks for reaching out with regards to your question. Additionally, thanks so much for the kind words and I’m glad that this video has been helpful to you already. Concerning your question it is my opinion that starting sooner is almost always better than starting later. With that said, depending on how much free capital you have, you may be passing up one or two deals that you are not able to purchase at the moment. I hope this first part makes sense.
The main reason why I suggest that folks get started now is because some of your deals will come from “high-priority sellers” that need to sell in the next 30 days and therefore you will purchase the home within the next week or less after making your purchase offers. However many homes that we purchase take days, weeks, or even months for the sellers to understand that your purchase offers are actually pretty fair and realistic based on the market. With that said I encourage you to begin now so you can start making offers, becoming more and more well known, planting seeds in seller’s mind, and growing your local word-of-mouth reputation. Keep in mind that I’m not simply talking about making offers to one or two sellers, over the next few weeks and months there is no reason why you cannot be well known throughout most parks and on a first name basis with many sellers.
I hope my answers have helped and makes sense. If you have any follow-up questions are specific concerns never hesitate to reach out to me anytime. Always here to help with you are a member of this program or not. Keep in touch.
Talk soon,
John
Thank you John for this information. I have been watching your videos almost daily. I have my eyes on a couple of homes and this video has helped build my confidence in the manner to approach the owners. Thanks again!
Hi Buffy,
Thanks so much for commenting and reaching out. I’m so glad to hear that these videos have been helpful to you thus far. If you have any specific questions or concerns never hesitate to reach out. In addition if you have any future topics for videos please let me know as well. Keep in touch and never hesitate to reach out anytime. Always here to help.
Talk soon,
John
John,
Clear and concise. I am chomping at the bit to get started. Keep me coming!
Jason