Investing 101: Finding Buyers
I thought I’d address the age old question a lot of folks have been asking me lately, “How do I find buyers?”
If you are investing in mobile homes and plan to buy and hold the paper, the question is not, “How do you find buyers,” but “How do you find the right buyers?” There’s a big difference. Why, you ask?
The difference is that if you find the right buyers, you are working with people who are in it for the long haul. You are working with people who really do want an affordable place to live and call their own. By having a place to call their own, they will take care of it because it is theirs. Why would they ruin something that they own? You are working with homeowners.
Real homeowners are people who love their home so much that they are willing to do anything to save it. If something happens to them financially, they will do all they can to either try to work with their lender and/or get another source of income to help pay for their home. The mindset is that they do not want to lose their home.
On the other hand, if you are just out there to fill your homes and find buyers just for the sake of it – you are not working with people who are in it for the long term. You are working with people who may not really want a place to call their own. Actually, they may be running away from someone or something, and may just need a place temporarily.
They may tell you they really need a place and may even suggest they want a place to call their own. However, in reality they just need shelter for the time being. Are they looking for a long term situation? Maybe. Maybe not. And, that “maybe not” can be the start of a headache for you.
For example, I had a buyer who applied recently. Basically, he told me he really needs a place to call his own and wants to get into something asap. He told me he’s living with relatives, going month to month right now. Told me that he’s got a good job – been working at the same job for 10 years. But, his credit is not so good.
Ok. So, I wonder if he’s got such a great job then why is his credit shot? Why has he had trouble paying his bills to make his credit not so good? I wonder.
So, he applied for the home – filled out the application and submitted all the required paperwork. The park did a credit check on this individual and yes, his credit was not so good. He had a very low credit score.
From the credit report, what I found out was that this potential buyer was 90 days past due on a home mortgage. He failed to mention this to me. In turn, the park manager called him up and told him what we found. It all came out over the phone.
The potential buyer told the park manager that he was currently in default for the home that him and his wife own – they are in the process of getting divorced. He told the park manager that he needs a place asap as the bank is going to be foreclosing on them soon and he’s afraid he may be locked out of his house.
So, the park manager asks him straight out, “Are you planning to walk away from the home?” The potential buyer says “yes.”
That’s all I needed to know to make my decision. This was not someone I wanted to work with. Why? If this person walks away from an obligation, especially his home, what makes me think he won’t do the same thing to me? Enough said.
So many times, I hear investors say how they just need to find a buyer(s) for their homes and just want to get them filled. They tell me they don’t care and as long as they are getting paid, they’re happy. Then, they tell me it’s ok because if the buyer(s) defaults, then they can go ahead and take back the home and do it all over again. Simple as that, right? Not in reality.
In real life, if someone defaults and you put the wrong buyer in there with the wrong mentality (by wrong mentality, I mean someone who is not willing to cooperate and/or work with you), it could turn out to be your worst nightmare. And, by nightmare I mean those nightmares that haunt you for the rest of your life.
Have you ever heard the saying, “It’s better to have a vacant house than it is to have a problem tenant?”
According to Murphy’s Law, “Anything that can go wrong will go wrong.” So, it’s better to do things right the first time – find a buyer(s) who will take care of the home and really wants a place to call their own.
This is a long term investment – your investment. If you gamble by putting the wrong buyer(s) in the home, you are putting your investment at risk as well as your sanity. It’s better to be safe than sorry.
I’m going to leave you here with a video from John C. Maxwell that inspired this post.
Happy Investing!
