Do you feel like it is impossible to find good real estate notes? Does it seem like you are competing against hundreds of others every time you make an offer to a note holder? All of us dream of the opportunity to buy good notes, earning great yields, with almost no competition.
Well, dream no longer! There is a very nice little niche in the private paper industry where you can purchase a heaping helping of all the good notes you can handle without fighting for your place in the bread line.
Well, dream no longer! There is a very nice little niche in the private paper industry where you can purchase a heaping helping of all the good notes you can handle without fighting for your place in the bread line.
That niche is mobile home paper
"But those aren't real estate notes!" you say. So what! Actually, some mobile home notes are real estate notes too, but it really doesn't matter. There are enough similarities to make the crossover easy for any investor or broker, and they are an excellent fit.
Does the idea of having a crack at 43,000 or more notes each year (ones that hardly anyone else is looking for) appeal to you? Bounce this thought around inside your head for a minute: Roughly 900,000 used mobile homes are being resold every year in a market with limited financing.
Although I haven't seen any research to verify it, I believe it is safe to assume that at least forty percent of those resales can be attributed to used mobile homes in parks. And you thought the notes weren't out there anymore?
The mobile home note arena is a marketplace that is vastly overlooked and somewhat mysterious for most note brokers and investors. And when I speak of mobile home paper, I am primarily talking about notes that are secured by mobile homes located in mobile home parks.
These notes are not real estate notes, but they are negotiable cash flow contracts secured by residences, so they do have a very common bond with real estate paper.
Does the idea of having a crack at 43,000 or more notes each year (ones that hardly anyone else is looking for) appeal to you? Bounce this thought around inside your head for a minute: Roughly 900,000 used mobile homes are being resold every year in a market with limited financing.
Although I haven't seen any research to verify it, I believe it is safe to assume that at least forty percent of those resales can be attributed to used mobile homes in parks. And you thought the notes weren't out there anymore?
The mobile home note arena is a marketplace that is vastly overlooked and somewhat mysterious for most note brokers and investors. And when I speak of mobile home paper, I am primarily talking about notes that are secured by mobile homes located in mobile home parks.
These notes are not real estate notes, but they are negotiable cash flow contracts secured by residences, so they do have a very common bond with real estate paper.
More similarities than differences
"But it's not real estate!" you say. Well, while mobile homes have traditionally remained personal property (not permanently affixed to and owned together with land), they exhibit many of the characteristics of real property.
They are year-round, single-family dwellings. They have long-remaining physical life spans similar to site-built structures. More often than not, they are never moved from an original delivery site. The major difference is that there is no land title involved.
Strangely enough, what little difference there really is makes for a BIG difference in the profits--averaging more than double the returns available for similar real estate deals. And if bought right, these notes are no riskier than any of the other type of notes.
Mobile home notes are bought and sold with very similar analytical procedures and title transfer protocols as real estate paper with only slight variation.
Lien perfection, recordation, orderly foreclosure processes, assignments of interest, insurance coverage, lender in possession, etc. all run along the same lines as the more traditional real estate notes. S experienced note players should be able to do both kinds of note transactions fairly easily.
They are year-round, single-family dwellings. They have long-remaining physical life spans similar to site-built structures. More often than not, they are never moved from an original delivery site. The major difference is that there is no land title involved.
Strangely enough, what little difference there really is makes for a BIG difference in the profits--averaging more than double the returns available for similar real estate deals. And if bought right, these notes are no riskier than any of the other type of notes.
Mobile home notes are bought and sold with very similar analytical procedures and title transfer protocols as real estate paper with only slight variation.
Lien perfection, recordation, orderly foreclosure processes, assignments of interest, insurance coverage, lender in possession, etc. all run along the same lines as the more traditional real estate notes. S experienced note players should be able to do both kinds of note transactions fairly easily.
The advantages
The most notable difference? Competition! There are not many major players in the mobile home note field, either as investors or as brokers. The investor or broker who knows how to get in there and deal with buying and selling these mobile home notes will have virtually the whole market to himself in any given community.
Not only can the used mobile home note niche make a huge difference in the success of your note business, but you will find that it can be a very lucrative specialty all by itself. And it offers the added advantage of giving you more deals to close. Never overlook this power of momentum.
Besides putting meat on the table, closing deals is what we live for. Each closing builds on itself, reinforcing our spirits and our desire, stoking our competitive fires to move forward toward closing more deals!
Having a steady diet of mobile home notes to work with can give you a never-ending series of small victories . . . and occasionally you will have the opportunity to work on larger portfolios of these notes, which can generate huge profits.
In fact, the gentleman who got me into this part of the note industry, Terry Vaughan, just recently made $76,000 on a mobile home portfolio transaction, and two years ago, he had the good fortune of picking up a $25,000 note on a double-wide mobile home, for only $5,000! Hmmm . . . I wonder what he had to pay in taxes?
Not only can the used mobile home note niche make a huge difference in the success of your note business, but you will find that it can be a very lucrative specialty all by itself. And it offers the added advantage of giving you more deals to close. Never overlook this power of momentum.
Besides putting meat on the table, closing deals is what we live for. Each closing builds on itself, reinforcing our spirits and our desire, stoking our competitive fires to move forward toward closing more deals!
Having a steady diet of mobile home notes to work with can give you a never-ending series of small victories . . . and occasionally you will have the opportunity to work on larger portfolios of these notes, which can generate huge profits.
In fact, the gentleman who got me into this part of the note industry, Terry Vaughan, just recently made $76,000 on a mobile home portfolio transaction, and two years ago, he had the good fortune of picking up a $25,000 note on a double-wide mobile home, for only $5,000! Hmmm . . . I wonder what he had to pay in taxes?
More advantages
What are some of the other advantages of working notes on mobile homes in parks? The real biggie, in my mind, is that you have three extra layers of protection for the notes:
Free park management that is keeping an eye on things for you everyday, whether they know it or not.
Less isolation than most mobile homes on land, so less chance for vandalism or owner waste to the property.
Parks want monthly lot rent, and this will usually keep you more up to date on default situations than private second real estate mortgages, so you can move faster to protect your interests.
There is a whole plate full of other advantages as well:
A lot more notes available proportionately in mobile home areas because there are not many lenders financing this kind of loan, particularly for older manufactured homes.
Captive markets in the form of mobile home dealers and park managers who also have a vested interest in the ability to obtain mobile home financing to protect their own businesses and cash flow.
Significantly larger yields on invested funds due to the limited playing field, and due to the higher degree of perceived risk by both the public and the institutional lending markets
Ability to enhance yields due to more opportunity for restructuring note payment rates to speed up the receipt of the discounted yield spread premium, or through partial purchase, split funding options
High frequency of early payoffs, providing further opportunity for overall yield enhancement through quicker receipt of discounted yield spread premium
Many smaller notes to work with, which allows you to spread your risk over a broader base and makes them easier to resell to private investors
Less expense in titling, escrow, recordation, transferring, and repossessing the security
More geographic concentration of notes and note holders, so you have an easier job of marketing to get the notes in the first place
They say that "money doesn't grow on trees," and they are right. But if you look closely enough, you'll discover that there sure is an awful lot of it hiding in the bushes!
If a note player decided to get out and shake the bushes a little bit, does it seem sensible to conclude that he would find there are likely to be at least another 350,000 private notes coming into the marketplace every year, in the form of used mobile home financing?
Can a reasonable person conclude that the odds are high that at least one in eight of those notes are available for sale at any given time? So I'll put the question to you again: Does the idea of having a crack at 43,000 or more notes each year (ones that hardly anyone else is looking for) appeal to you?
The notes are there. But you have to get out there and find them! So what are you waiting for?
If a note player decided to get out and shake the bushes a little bit, does it seem sensible to conclude that he would find there are likely to be at least another 350,000 private notes coming into the marketplace every year, in the form of used mobile home financing?
Can a reasonable person conclude that the odds are high that at least one in eight of those notes are available for sale at any given time? So I'll put the question to you again: Does the idea of having a crack at 43,000 or more notes each year (ones that hardly anyone else is looking for) appeal to you?
The notes are there. But you have to get out there and find them! So what are you waiting for?
