Cash Flow for Two Years with No Money Down

I got a call from a guy yesterday who got my name from the local mobile home parts supplier. They mentioned that I buy used mobile homes, and this guy had just bought a new home and was selling his old one. He wanted to make sure he wouldn’t have to pay lot rent on top of his new home payment.

I told him I might be interested if the price were right. He said $500 for an ’85 Redman 14 x 70 3-bedroom / 2-bathroom in decent shape. I told him I would have a plan by Monday and to let me put a sign in the window.

Today, I get a call from a young couple with their first child on the way. They have been driving through the park and noticed a few of my signs. “Low Down – Low Monthly” Call xxx-xxxx.

Turns out these folks have already talked to the mobile home park’s broker, and he let them out of the office with a $1,000 down payment in their pocket. He took the time to explain all of the park’s crazy rules for me:

They do home transfer inspections to the homes before they change hands and upgrades are required for the park allowing the home to stay on the property. Somebody has to put money in escrow to cover the associated costs!

My clients agreed to do all of the work and put the funds in escrow. I wrote the deal at $4,995, plus tax and fees or $5,384.70 total. I have a $1,000 down payment and a note for $4,384.70 at 12.99% for two years or $208.44 for 24 months. At this point, I do not have any of my own money into the deal, and I have a CASH deposit in my pocket.

I called the seller today and said, “Good news! I figured out how to get you $600 instead of $500. When you moving?” He says “Right away.” I agreed to give him $300 when my buyers are approved for residency in the park and the other $300 on his move out date. It felt good driving home after only being out of the house for an hour.

I am not certain what my yield will be on this deal yet, but one thing is for certain–with NOTHING invested, it’s “good enough”! Thanks again, Lonnie Scruggs, for allowing me to quit my day job.

PS. I can easily sell this note after collecting one payment for 80 cents on the dollar! The best news is that I DO NOT need to sell this one. I am looking forward to the long walk to my mailbox for the next two years. But I KNOW I can sell my notes at any time now, and that is a great feeling!

(Hint: These are great for Self-Directed IRAs, but there are institutions paying as high as this and more right now as well!)


News Flash: In July 2008, the buyers had an opportunity to get another home and called me asking if they could just give this home back to me. I agreed as long as they cleaned it up well and kept paying the lot rent until the home was sold. They agreed and moved out of this home and into their new one.

It took them a couple of months to get the old home up to snuff. I put my sign back in the window and started advertising the home. By the time the home was ready, we had a new buyer lined up and sold the house AGAIN for $6,995 with $1,000 down and payments of $196.27 for 36 months.

This home actually sold for more the second time around, and the money machine keeps paying every month! I get a headache trying to figure out the yield on this one. Glad I didn’t sell this note…

About the author…

Marc Faulkner is a manufactured home broker and note buyer for Creative Funding Service, Inc. Marc’s website is:

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