026 Buying Mobile Homes without Proper Due Diligence with John and Ryan

In today’s Mobile Home Investing Podcast episode #26, I’m very happy to welcome active mobile home investor Ryan to the co-hosting microphone. In today’s 54-minute podcast episode we dive into example after example when it comes to rushing into mobile home investing opportunities and deals too quickly. Learn from our mistakes rushing into working with shady mobile home sellers, handymen, high-risk tenant-buyers, purchase offers, closings, and unseen repairs.

I am super proud of everything Ryan has accomplished in such a short period of time. Ryan has already been able to help multiple mobile home buyers, park owners, and mobile home sellers. This is only the beginning. Special thank you to Ryan for opening up his business for this podcast to help other investors he’ll likely never meet.

Rushing into mobile home deals, purchase offers, and closings.

At first thought this may be what most investors think of when rushing into deals. In reality it may not be until days or weeks after you purchase an investment property that you realize the mistakes, oversights, or errors that were made. Perhaps there is an unseen ownership/titling issue, overpaid purchase price or terms, unseen repairs/damages, park location or management issue, state issue, etc. Rushing into a real estate deal and closing too quickly may develop from an investor…

• Investing mainly with emotions instead of logic.
• Not truly understanding your local numbers and/or local supply and demand.
• Having an exit strategy not based in reality.
• Having uncertainty with regards to your purchase and sales process/paperwork.
• Not completing a checklist or due diligence process that ensures you know what you are buying, making proper repairs, understanding the park criteria or land, location, and your very realistic exit strategy.

Pro Tip: It may be helpful to seek out the experience and help from other more experienced investors. Look for local or nationwide experienced investors to ask questions and get real-time advice from. Remember trial and error may be an expensive teacher.

In the mobile home investing podcast episode below John and Ryan cover: 

• 1:05 Ryan’s quick mobile home investing bio.
• 1:50 Which mobile homes did Ryan buy too quickly and why?
• 3:20 Different due diligence checklists depending on which type of mobile homes and/or if land is included.
• 4:23 Analysis of paralysis.
• 5:39 Purchasing a mobile home on private land creatively with a hidden lien.
• 8:30 The penalty for being cheap.
• 11:29 Investing with too many emotions.
• 12:40 Buying a $4,000 3/2 mobile home inside a park and overpaying. (Deal #1)
• 15:30 Making repairs and becoming stressed.
• 16:33 Selling to high-risk buyers in a hurry.
• 18:30 Reselling to a low-risk buyer for long-term cash flow.
• 20:28 What would Ryan say to the past version of himself to slow down?
• 24:12 What reasons did the first buyers fail?
• 26:30 Who’s responsible for defaulted tenants or tenant-buyers?
• 27:40 100% default rates for first 4 years.
• 28:10 What traits help make a low-risk qualified tenant-buyer?
• 31:39 Taking time to screen tenants and tenant-buyers.
• 35:07 Rushing into paying sellers for their mobile homes. (Deal #3 and #5)
• 39:00 What steps Ryan will do differently moving forward?
• 42:51 A crash course in human nature.
• 44:05 The best ways to learn and avoid mistakes moving forward?
• 46:33 When sellers mislead and lie, we investors typically lose money.
• 49:47 Each day brings new things and opportunities when you stay very active.
• 51:32 Following checklists and policies help keep emotions out of your investing business decisions.
• 53:02 What are Ryan’s mobile home investing goals for the next few months?

Rushing into selling to unqualified tenants and/or tenant-buyers.

In today’s podcast Ryan mentions this type of rushing (selling to unqualified tenant-buyers) may be the most painful and longest lasting common mistake. One or two unforeseen repairs may be corrected and typically overcome quickly; however a problem resident or tenant-buyer may be a consistent headache for months or years to come.

There are so many things to consider while aim to avoid unqualified tenants that this article and podcast will not discuss when it comes to rushing into selling and dealing with potential high-risk applicants. We mention these topics and questions below to help make sure you have clarity in these areas moving forward. If you are unsure, ask question. When selling and/or renting mobile homes consider…

• Thoroughly vetting and screening all adult applicants for your investment property. (This should be the first three bullet points it is this important.)
• Selling for the appropriately profitable win-win price and terms.
• Eventually outsourcing repetitive tasks while buying and selling.
• Proper legal paperwork while selling.
• What paperwork is needed from/to the mobile home park if applicable?
• The ability to explain things clearly to all parties.
• Choosing a closing location.
• Additional instructions for the tenants moving forward.
• Collecting payments and management

Rushing into working with handymen.

As an active mobile home investor, it is only matter of time before a contractor and/or handyman will aim to take financial advantage of you. This may happen by stealing your time, materials, money, tools, credibility and/or respect from your company. This coming attempted theft is not something to fear, it is only something to prepare for with confidence, a plan, checklists for handymen/contractors, and paperwork for handymen/contractors.

✔ Confidence: The confidence to stand up for your must-have criteria requirements when it comes to successfully working with a handyman or contractor must be meet 100% or you’ll gladly walk away. Confidence comes from remembering you are in a position of power to always walk away.

✔ A Plan: Understanding which repairs will be corrected and which will not. Understanding your needed repairs, handyman criteria, handyman funnel, sales process, the buyers you are looking for, paperwork moving forward and a management plan.

✔ Checklists for handymen/contractors: Understand what requirements, paperwork, experience, licenses, referrals, proof, insurances, etc. are wanted and/or needed by you and your company when screening handymen. These requirements will vary from investor to investor. For more questions about your specific situation please feel free to comment below or email [email protected].

✔ Paperwork for handymen/contractors: If you ask 10 different investors what paperwork they require their handymen and/or contractors fill out and sign prior to making repairs you will likely receive 10 different responses. Some paperwork that may be prudent to have filled out and signed by your handymen include a Scope of work agreement, Contractor’s agreement with deadlines/penalties, Project tasks list, Lien releases, etc.

In conclusion every mobile home opportunity is a unique property. Every mobile home seller and buyer is typically in a unique situation. There are usually no cookie-cutter approaches or purchase offers to make with mobile home sellers. It is best to fully understand exactly what you are making an offer on, buying, who you are working with, and the correct steps needed to safely move forward in any win-win transactions.