“If you don’t feel comfortable owning something for 10 years, then don’t own it for 10 minutes.”
- Warren Buffett
I’ve mentioned in prior posts that I only work well established, high end parks now due to this experience. I value quality over quantity. Some have asked how I know whether to go into a deal or not. To be honest, when it comes down to it I will only enter into a deal now if I can answer “yes” to both of the following 2 questions:
1) Would I live in this park?
2) Would I live in this home?
After I meet with a seller, I ask myself these two questions immediately responding with the first answer that comes to mind. When I go by this rule, then I can firmly believe that I have a product that I would buy. The question is, if I won’t live in this home and/or live in this park then why would others?
This is just my experience and my personality – I have to have a product that I can stand behind. So many times, I get park managers bringing me opportunities that I pass on because I’ve had to answer “no” to the above questions.
The response is, “Who cares! You’re not the one living in this home or in this park, you can make so much money with this.” (Note: There is an article here I wrote specifically on the subject of money).
Though, what I’ve found is these opportunities are very short sighted only for the short term. Sure, maybe the home can be filled with a potential buyer but what kind of buyer are we talking about? If the park is more of a lower end park, what kind of people does the park attract?
In the end, I am looking for long term stability. I know there are Lonnie dealers out there that work these kinds of parks – it is their bread and butter. But, what happens when you have to keep taking back homes over and over again? What happens when you have buyers who cannot make ends meet and it takes a major eviction to get them out? What happens when you have to take a home back, it is wrecked and it takes more time and money to get it fixed up?
This is not the kind of investment I am looking for. I went into this business for financial freedom – not to be tied down. Sure, the homes are cheap in these kinds of parks. Though, I find it a very short term kind of investment. Right now, I am seeing so many defaults in the lower end parks. Sure, there are a few in the high end parks as well. Though, I find it much easier and less stressful to fill homes in high end, well established parks who attract quality buyers.
Quality buyers are much more important for the long term. Sure, anyone can fill a home fast. But, are these homes filled with quality buyers? I am seeing investors taking very little to no money down on their homes in the lower end parks. (Note: I never take in buyers without a decent down payment, they need to have something in it).
What’s worse is I’ve heard of Lonnie dealers having to convert their “Lonnie deals” to rentals just because of the turn in economy. (Note: If you’d like to read up on the “real deal” (without the hype) and issues affecting mobile home investors today, check out this thread on this forum).
These are the types of issues that have and will come up in the future. And, it’s better to be prepared for them before they happen.
In the end, I prefer doing these deals for the long term (not the short term). Though it may seem tempting to buy cheap homes in lower end parks, it is the deals that I have entered into for the long term that have really made things easier and reminded me of the true meaning of financial freedom.
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