BiggerPockets Real Estate Podcast - 976: How to Start Mobile Home Investing (The Right Way) for Just $15,000

Starting point is 00:00:00 What's the deal with mobile home investing? And why do some investors find it problematic? Many investors say that you can put a little down and make an excellent return. But how can you do this ethically where it's a win-win situation with your tenants? Today, we're talking about all things mobile homes. Hey, everyone, I'm your host, Dave Meyer, and with me today is Henry Washington. And in today's show, we're going to talk about mobile homes and mobile home park investing. And we're going to bring on a guest.

Starting point is 00:00:34 John Fedro, who's been investing in mobile homes for a very long time and has a broad spectrum of experience with this strategy. So we're going to hear all about his experience. And as you'll hear in the conversation, a lot of it centers around this concept of lease to own or lease options. And just before we get into the conversation, wanted to explain what that is. You might have heard this as rent to own, but basically the situation is when, some someone owns a property or a mobile home, they can create a structure where the tenant is basically buying the property from the current owner, you, the investor, over time. And this can be a really great way for people who struggle to afford a down payment or might not have the right credit to get into home ownership. So there are some challenges, though, and some nuances to lease to own that I want you all to understand just so this conversation makes sense.

Starting point is 00:01:34 and context. But basically, when you're a tenant in a lease to own situation, typically you are paying more than you would to rent out that situation because you're trying to own that property, you're maintaining that property, and you just take on more than you would if you were just a typical renter. And that's all well and good. But what happens, unfortunately, sometimes, is that a tenant in a rent-to-own situation, a lease-to-own situation, falls behind on their payments. And then the landlord basically can retake the property. and it leaves the tenant in an unfortunate situation because they've been paying more for this property and now they're not going to get to own it. So it can create sort of misaligned incentives between a landlord and a tenant.

Starting point is 00:02:19 So I just want to explain all of that because we'll add some context to the conversation that Henry and I have with John. All right. So with that disclaimer out of the way, let's bring on Henry and John to talk about mobile home investing. John, welcome to the show. Thanks for joining us today. Thank you so much for having me. This is awesome. Yeah, it's great to have you here. So, John, I feel like a lot of people who are first getting started and investing, myself included, don't really consider mobile homes or mobile park investing generally as an asset class. So how did you get into it and how did you feel about it when you first started? It's perfect that most people don't think about this niche, which keeps us a little more hidden in underground. Well, like most people, I have an ego and I never wanted to be a mobile home investor.

Starting point is 00:03:07 I never lived in a mobile home ever, well, once I guess, but never like growing up. So I did live in one of my investments for a short period of time, but I've never lived in a mobile home, didn't really have any friends that lived in mobile homes. They were not on my radar. And so I failed, I say that in a good way. I failed into mobile homes. That was my first deal, was a mobile home in a park. and then two weeks later, I got a mobile home attached to private land. And I was embarrassed. Like I said, I had an ego, well, like most real estate investors, and we want to do nice, pretty homes, and we want to brag to people. And so I was embarrassed for my first six months investing in mobile homes. I didn't tell other investors. I would go to real estate clubs, and I would sit on the side pretending not to have done deals when I know other people that were older than

Starting point is 00:03:59 me, they weren't doing deals and they kept showing up. And I was embarrassed and I finally told people what I was doing after six months, buying them in parks, selling them in parks and on land. And people would actually, they said, like, John, why didn't you tell us sooner? We don't want these properties. You can have them. So it took me a month to really embrace that. Okay, there's a need for this type of investing and I'm going to fill that need. What was it about mobile homes that you felt wasn't worthy of sharing? Oh, that it's not real property, that it's not real estate, it's not, it's like failing into it. You want to be a doctor and you become a dentist, sorry, dentist, which is a great profession and you can make a ton of money.

Starting point is 00:04:46 But I was embarrassed. These are trailers. The trailer trash term gets thrown around or slum lord. Oh, this guy is just being a slum lord. you know, joking, like laughing it off. And that was something I couldn't handle at the time, my sensitive ego. That was it. But it allowed me to start investing with very little money. I was broke at the time. And so this was a vehicle to get me to a lot of wealth. Well, were you a slum lord? I'm going to quick answer, no. But it did take me like five years to realize my first five years selling mobile homes was just a slum lord. I'm going to quick answer, no. But it did take me like five years to realize my first five years selling mobile homes was just on payments. In fact, from 2002 when I started to about 2015, mobile homes are cash cows. That's, you know, you've probably heard that in mobile homes are cash cows because you couldn't

Starting point is 00:05:35 sell them for cash. It was extremely difficult for that time to sell a mobile home and find a buyer that would cash you out or get bank financing. So for my first five years, I sold everything on payments, except for mobiles on land. You could sell those with bank financing. But the ones in the parks, I would sell in my first five years, the reason I bring up five years is because every one of my properties defaulted. The people I was putting into those homes kept bailing. They would stay a couple months. They'd stay a couple years. But eventually they would bail. And it wasn't because the homes were crappy or they were slummy. In fact, everything I sold was as is. So the person moved into the home, they fixed it up if it needed fixing. But usually it was very nice. But I wasn't a slum lord,

Starting point is 00:06:20 but what I was was setting people up for failure on accident or not really knowing. Because, as you can imagine in this world, there's a lot of people that will agree to pay something. Like, oh, sure, I'll buy this house for a million dollars and pay on it. And you're emotional. I mean, not a mobile home for a million dollars, but like a house. People get into bad mortgages and loans all the time. So I was putting people in high interest loans. I didn't approve the people very thoroughly. The park would get in people with just a pulse. So it's just I was putting the wrong people into my homes that were never going to stay the five or 10 years because I sell my homes on five to 10 year notes. And so I was just putting the wrong people in the homes, selling for high interest and the properties were too expensive.

Starting point is 00:07:10 So nowadays, I sell for a lower amount with zero to average interest and most of my homes get paid off. So anyway, I was never a slum lord, and I'll say that proudly, but I was sort of setting people up for failure in the first few years, which was an eye-opener. Yeah, so this is similar to a strategy I hear people talking about, which is like lease options, right, where you essentially put somebody back into a property, they take over, you know, caring for that property, paying the taxes and the insurance, and they have the option to buy. But I feel like some people see this, or the way some people do this is they're putting people into properties who maybe can't. actually afford to turn around and buy it and so the landlords take it back. What made you, like, what was the shift? You saw that this was happening and then it clearly sounds like you maybe understood that this wasn't how you wanted to go. So what made you kind of realize what you were doing and then make a shift? Good question. There are vampires out there right now that are like licking

Starting point is 00:08:11 their lips and drooling because they say, John, that's a great strategy. Get people in the home, take the down payment, collect payments for a few years. then you get the home back and you can resell it and you just keep doing that and you keep like, you know, people keep bailing and you can just keep selling the home. And there's a lot of people that are like, that's such a good strategy. When it gets tiring after a while, A, it doesn't feel good emotionally. And B, you have to go backwards. Like when you get a property back, you go backwards some.

Starting point is 00:08:43 Now, people usually didn't damage my properties. I realized that only if they were vindictive towards me, Like most people, when they can't pay, they leave or they stay a month or two and then they leave. They don't want eviction. And with some kind words, with a little bit of money, maybe, you can get people out of your home in a little bit of time without doing an eviction, without them damaging the home. So you could, and then you can resell it. But, A, it gets tiring emotionally because you want, I'm in this business to help people.

Starting point is 00:09:13 And also, you take a big step back. It's like, okay, I just got a property back. Now I can't focus as much on gaining more properties. my marketing, my closing. It takes my focus away, and I have to now resell this other property that I thought I had. So I'd rather have people knowing they're getting a good deal paying me off. Like, John, I want you out of this deal. So I'm going to keep paying you until the node is over. So for me, it was looking at myself in the mirror and realizing that it wasn't good for business. You just move backwards and you can't move as forward as you would like because you're dealing with that other home that you, you got back. Yeah, I mean, to me, that does what you're describing sound like the reason a lot of people avoid getting into this type of investing because that does feel, like at least your early deals, feels like you're putting people in a negative financial position and that's probably worse off for them than even renting is. Which should never be the case. And you should

Starting point is 00:10:13 really know your buyer. I mean, it's taken me now 22 years. I think I have a good grip on the buyers that want to buy something on payments and how to make it win-win. This doesn't. In the beginning of my business, I really thought it was like a win-lose relationship. If I win, you have to lose both on the buying side and the selling side. And what a terrible investor mindset. It's like somebody has to lose here. We all want the same thing.

Starting point is 00:10:38 The sellers want to sell their homes and I want to buy it. The buyers want to buy this home. You just have to know how to really analyze a buyer and make a business. sure that they have the ability to pay. And it's the right time of their life. I mean, very, there's only certain times in our lives when, okay, we're ready to buy a home. We're going to stay for a couple years. We have responsibilities. We have a track record. But it did take me those five years of realizing that I think in those five first five years, I only did, I want to say like one eviction, maybe. It's either one or zero. Since then I've done a number,

Starting point is 00:11:12 since owning parks, I've done more. But those first five years, I didn't have to do, I think, One eviction, maybe. Okay, we've got to take a quick break, but we'll be back right after this. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand-new construction homes, 10% below market value in the best markets across the country, without making real estate your second job?

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Starting point is 00:13:24 Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, landlord insurance designed for the modern investor. Welcome back to the show. We're here with John Fedro talking about mobile home investing, so let's jump back in. You mentioned this sort of like win-lose thing, and I personally am a very big believer that real estate should be a mutually beneficial situation between tenants, investors, communities, service providers, everyone who's involved at it. Like, no one has to lose for an investor to win. So, John, how now, since you've learned these lessons, do you ensure that it's sort of these mutually beneficial situations and deals going

Starting point is 00:14:04 forward? This is an old saying, but buying with the buyer in mind. So buy the mobile home with your end buyer in mind. That's the first step. It's like make sure you got a deal well under market so that you can sell it under market a bit and it sells faster. You get more people interested. You make a hell of a profit.

Starting point is 00:14:25 And so buying right is the first, I guess, like fundamental thing. Because if you just pay too much, then you're not, then you're going to have to dupe somebody else into buying this thing that you should never have bought.

Starting point is 00:14:36 And then when you do sell the home, now you can sell it for, cash. For the past nine years or so, which is a long time now, we've been selling way more homes as mobile home investors for cash, which has allowed me to save up more money, which has allowed me to purchase parks. So if you're selling for cash or bank financing, you really don't need to care if those people are, as long as they have the cash and can get approved at the park. But if you are taking payments, then you want to be super thorough on the background check that you do with your folks. You want to make sure that they have the ability to repay you. They have a good job,

Starting point is 00:15:12 that they're showing up on time. They don't have a victim mentality. There's more stuff besides just like the numbers. Do they look good on paper? Do they show up on time? How are they treating you? Do their demeanor seem normal every time? I kind of like to poke the bear a little bit when I'm selling homes on payments. I try to ask the potential applicant for more and more things. Like not in a crazy way. Like, what bicycle did you first have growing up? But just things that I'm kind of like keep asking. That way I can tell if they're going to get offended.

Starting point is 00:15:45 Like, why should I have to give you this information? Or what's taking, you know, what's taking so long, even though I try not to take a long time? But, you know, why do you keep needing this? I want to somebody that's not entitled and they're appreciative of this needle in a haystack opportunity that I'm providing them. Not to mention verify income, not to mention call previous and current landlords. So be super thorough. Thank you for explaining that, John. And so over the course of your career, have you seen the success rate of your purchase

Starting point is 00:16:11 options, your lease options go up? Yes, it is. It is sort of nice to get some properties back and you can resell them again, but that hasn't happened in a while. And now when people do need to leave, people get promotions, they move away or something bad happens and then they can't pay for the home anymore. But my people now, because I have a better relationship with them, because I've vetted them so much more thoroughly now. They call me ahead of time, which is, you know, what a concept.

Starting point is 00:16:39 John, I'm not going to be able to pay or John, I need help with this. And so, yeah, it is shrunk dramatically. I don't know if it was this year or last year. I had one person default between all of my rent-to-own properties in other people parks and my parks. So super low, super low now. I think the key here for those listening is intention, right? Because this is a legitimate strategy if done properly. There are an entire subset of people who truly need an opportunity like this to be able to own property, right? But I think you have to have the heart and the intention to provide that opportunity to that group of people. And we as investors have to take on the responsibility of putting people in situations.

Starting point is 00:17:33 that they can win, that they can be profitable in. Like we have to know that on the front side and actively look for people who, A, need the opportunity and B, we feel like can actually capitalize on that opportunity. And when we do that, we turn those win-lose situations into win-win situations, because you are essentially in the privileged position to be able to help with one of the biggest problems our country is facing. And that is providing affordable housing. And so I think that this is a strategy that more responsible investors should take on because we do need this. We need this as a country. And there are families who need opportunities like this. And so if you are

Starting point is 00:18:27 considering this as an option for you, I think that you need to take a long, hard look in the mirror and ask yourself, why are you doing this? Are you doing this because you can make a bunch of money? Or are you doing this because you have a passion to want to be able to help people who are in a position where this might be their only option to afford housing? And if that's the approach that you take, if that's the heart that you have going into it, I think it can be, A, extremely profitable, but be extremely socially beneficial. And where those two things meet, I think you'll find passion.

Starting point is 00:19:01 And when you find passion, you'll just continue to grow and scale your business. There are certainly plenty of scumbags out there that don't think about the end buyer. They don't have those people in mind. So what I'd like to do here is, because when I hear mobile home investing, like my brain kind of goes all over the place

Starting point is 00:19:20 because there's multiple types of mobile home investing, right? You can buy mobile home. that are on a plot of land. You can buy mobile homes that are attached to absolutely no land and you're just getting the mobile home. You can you can buy mobile homes and you're just buying the one home that's in a park that you don't own or you can buy entire mobile home park. So when you say I'm a mobile home park investor, like what does that mean? How, what kinds of mobile home deals are you doing or do you specialize in? I'm sure you've probably done them all. But can you kind of give us a little example or definition of kind of what each is and then where your niche specifically?

Starting point is 00:19:55 specifically is. Over the last 22 years, mobile homes have kept me busy, which is awesome to say and that I've like doubled down, triple down in mobile homes. First, buying the individual mobile homes, just the rectangle on somebody's land for a couple grand, which I still do in somebody else's community. And then buying the mobile homes attached to a piece of property that I also own. And the same sellers, you know, a lot of these mobile home sellers are sort of paycheck to paycheck folks, good people, but they may not have a lot of cushion. And so when things get bad, there's title problems, health problems, job problems, home problems. The list goes on, but folks need help quickly. And it's the same if you live in a mobile home, in a park or a mobile home on private land. Those are good people in, you know, sometimes desperate situations. And I learned that quickly. And then it took me, over a decade to actually have the courage, the foresight and the capital to buy the entire parks. Before then, I was like adding homes to land and doing some things here and there, but it's not an entire park. So I think the three levels are buying them in somebody else's park as personal

Starting point is 00:21:13 property, which gets a lot of people, like if you're not in real estate, that's a great way to get involved in real estate without a lot of capital, buying them. And in parks, we can wholesale them. We can buy them and fix them and flip them for cash. We can sell them on payments. We might be able to rent them if the park's okay with that. And then on your own private land, just a little 1Z mobile home on a piece of land, a small piece, not like 10 acres necessarily.

Starting point is 00:21:43 And you're selling that, either owner financing or you're renting everything, or you owner finance the home and you keep the land. It's like a one-space mobile home park. And then the third level is like buying the entire parks and then cash flowing those, adding more homes, increasing lot rent, increasing how it looks. So what would you say the majority of your deal flow is right now in which one of those levels? Oh, definitely still buying and selling the individual mobile homes. Cash flowing those, wholesaling them, selling them on cash.

Starting point is 00:22:15 whether I'm traveling around the country like I am now or back home, definitely buying and holding and selling individual mobile homes in parks. And can you just give us like a brief pro and con of each of the different types of investing here? Like what strategy might work for different types of investors? If you're looking to make money, like, okay, I want to help people. I want to make money. I don't have an ego.

Starting point is 00:22:41 Then you're going to do more deals in parks because you don't. need a title company, you don't need a real estate person, you don't need a mortgage broker. And so always throughout my career, I've always done more deals in parks than on private land. And so it's always been like a five to one, seven to one, four to one ratio. I've always been doing more homes in parks and then I would do one home on land. Because the people on land, they have some more options of how they can sell and they have a little bit more breathing room in a mobile home park, that park wants lot rent. And if they don't get it, you are being evicted very shortly after in most parks. Some parks drag their feet and don't evict you as

Starting point is 00:23:23 quickly as they should. But I've always been doing more homes in parks than on private land. The ones on private land, you do need more capital. You can take those homes subject to the underlying loan, which is very nice. That's how I got into my first one, because I didn't have any capital. And then you can sell them for usually a bigger payday. The ones on land, they have the land with them. So you can sell them easier or quicker or faster for more money. You can take a bigger down payment when you sell on payments. You can sell the home and keep the land forever and then just charge a lot rent.

Starting point is 00:24:00 So even if you're hustling, doing everything, you're going to be buying more in parks because it's so quick. People need help there. And they're kind of clustered around each other. mobile homes are social creatures. And so in parks, they're all in one area. Mobile homes on land, usually the zoning is sort of similar around a certain area. So you'll find one mobile home. You'll probably find a bunch more. But the people in parks don't have as much breathing room. And can you just give us like an idea of price point? Like what does it take to get into one of these deal, pick your favorite strategy, tell us, like, give us some of the numbers of how it might

Starting point is 00:24:40 work out. In mobile homes in other people's communities, under $15,000, some areas around the country, the East Coast, West Coast in certain areas, like 20,000 or less, but you do not need a lot of money. Just because you have 40 or 50 grand, doesn't mean you have to spend it. I want people, even if you have $5 or $50,000, to do the same deals as if you only had $5 or $10. So to get into mobile home parks, the mobile homes in the parks, absolutely under $15,000. If you drive around you, like in most directions, you'll find thousands and thousands of mobile homes. And we only want to do like one, maybe two deals at a time.

Starting point is 00:25:24 So yes, you can spend more, like the retail value in the past 10 years has shot up in mobile homes. So the retail prices we're selling these for is significantly higher than it's been. Maybe in 2002 it peaked and now it's down a tiny bit. So the retail price is still stupid high. But the buying and the acquiring prices, we are still purchasing those homes for like we were back in 2002 a long time ago. If you want to buy the homes with the land, personally, I say not to have too much money either. Unless you want to just pay cash, with buying mobile homes on land, I try to use creative strategies, purchasing with payments, purchasing subject to the underlying debt, you're going to buy an entire park, I'd say to have $100,000 or so set aside.

Starting point is 00:26:13 I think one of the things that's attractive for real estate investors in this particular asset class in this particular market is the idea of being able to buy something that actually cash flows. And so if you're buying something for 15 to 25,000, right, do you have situations where you've bought these properties for around those price points, but you're renting them out? And if so, like, what are you renting them for? a few things to unpack there. So if you're putting in that much money to one property, in my opinion, that's a lot of money. And so I want, whenever I sell a mobile home for cash, I want to at least double it. So if you have 15 or 25 into a home, I say get out of it. I mean, because like, or you know, cash out and sell it. Because that's, if that's a mobile home in a park, unless you can get all your money back in 12 months or less, the litmus test, in my

Starting point is 00:27:05 opinion of buying and selling mobile homes. If we're talking just inside of parks, when you sell them for cash, you want to at least double your money, at least, unless it was a mistake and you shouldn't have got into the deal. If you're selling on payments, I want people to get all their money back in six to 12 months or less. Even maybe with the down payment, you've collected a big down payment of 15 or 20 grand. You've gotten all your money back. But one year maximum, I want people to make $400 cash flow and then sell for at least five years worth of payments, 60 months. So if you did buy for $15,000 or $20,000, it depends on the neighborhood.

Starting point is 00:27:48 If you could get $12 or $15,000 as a down payment and then make your money back in cash flow, that's the way to go. If you're going to rent it out, you don't have the ability to take a down payment. So if you're into a home for $25,000 and you just rent it for like $1,000 a month, and it takes you 25 months to get your money back. That's not, in my opinion, that's not a good deal. We can do better. That is a skinny deal.

Starting point is 00:28:12 And like I said, many parks won't allow you just a straight rent. But if you could, I'd still on a rental want you to get your money back in like 16 months, maybe. So we're really doing, we want to get our money back fast. That way we can keep turning it. I know that our mobile home investors start with 15 grand. That's our seed capital to start everything. else. So usually the first couple homes, we don't have the luxury of selling on payments. We got to sell for cash to keep getting our bank accounts higher, then we can keep one on payments. Sell a few for

Starting point is 00:28:46 cash, wholesale for cash, then keep another one rent to own on payments. I'm sure there's other ways to build wealth, but that's how I would suggest it. And when you say sell for cash, do you mean you're just basically flipping it? Big time. Yeah, yeah. It's never been a better time to get, well, the last nine years or so has been a great time to get cash. There's buyers with cash that will pay 10, 20, 40, 60 grand for our used homes. So, John, you know, the margins here sound very compelling. When you talk about either doing a straight rental or a lease option, what are some of the expenses and management considerations that investors should take into account? Mobile homes, if they're airtight, or not airtight, if they're watertight, they're watertight,

Starting point is 00:29:31 they will be almost indefinite things, creatures. It's water that really damages these mobile homes. So I've been through homes in the 2000s that look worse than homes from the 70s or 80s. It's really the pride of ownership and how you keep up with it. So if you're going to rent a mobile home to a renter, I encourage people to make sure that they walk through that home every quarter and fix things accordingly. because renters will damage your mobile homes. I guess if you have a renter in a house versus a

Starting point is 00:30:06 mobile home, they're going to put more wear and tear on it with a mobile home. Now, if you sell rent to own the way most people do the way I do, the buyer is going to be responsible for the repairs and you want somebody in there with a pride of ownership. So the management, for my first, I don't know, 10 plus years, I managed my own properties. Where in the beginning, it was more difficult because those people weren't trained well. Like I said, my first five years, I was getting a lot of homes back. But when you set expectations with your buyers that are making you monthly payments, and they know that you are not going to be doing repairs, they are responsible for the repairs. As long as they pay, they stay. They got to follow park rules. They got to follow my rules.

Starting point is 00:30:53 You have people that they do their own work. I go by and see the homes just because I like to, you know, Hey, what'd you do to the home? Did you improve? You know, like, what's going on here? And I kind of poke my nose in every so often, but not too often. And you have good people in there that they take care of their own problems. They're not calling you for repairs unless it's a super major one, because I do tell people, hey, if something big happens and you're having trouble, call me. Otherwise, don't call. But if you do need help, you know, bad news is better than no news at all. So when you're selling on payments, you have people that just pay you. They, they will. want to get you out of the picture, they take care of all their problems. There's really so little

Starting point is 00:31:36 management when you've sold a home right on payments. Renting is a different story. Rental, you get all the same problems as a house. But when you sell on payments, the right, to good people, it is little to no management. Are you ever selling these properties as a home? And the reason I ask that is because I did a flip this past year of a mobile home. So it was a mobile home on an acre, but the entire neighborhood was all mobile homes on an acre. But they were sold as houses. So they were comped against other like properties that were houses because they were technically, they had to be affixed to the foundation. And what I found out when I went to go sell it was there's a lot of things that need to like happen and be documented that they have. And

Starting point is 00:32:26 happened in order for that property to be affixed to the foundation and be sold as a home. Is that anything you're ever dealing with or what do some people need to look out for when they're going to sell a mobile home as a home? Definitely. So, well, if you know you're going to sell to somebody, if you know that your exit strategy is, I want to sell this home for bank financing, then that's one course of action. But if you're getting into the deal knowing I'm going to sell this on monthly payments, or I'm just going to rent out everything, or I'm going to sell the home, because you can attach them legally to each other, the home and the land. You can also unattach them legally. So you can just sell the title to the home and keep the land for yourself.

Starting point is 00:33:08 So knowing your exit strategy before getting into the deal is super important because you're right, Henry, if you get into the deal thinking, okay, I'm going to sell this as a, as all real property. And you get into the deal realizing that the foundation is incorrect or the laws have changed in the ordinances locally or you can't comp them off of house values or they need the title for some weird reason, but this home doesn't have a title and hasn't had one since 1982. You know, that's going to be a monkey wrench in the gears that will stop this. So you really have to know the due diligence ahead of time on the exit strategy. luckily you could always sort of sell on rent to own and you don't need the comps from a bank to justify the price that you're selling for. You don't need to comp it out if you're just selling on monthly payments. Only if they're going to get a bank loan or insurance do they need more of an appraised value.

Starting point is 00:34:08 That's a great call out. Selling it to somebody who's going to use bank financing, right? You're going to have to have that affixed to the foundation. And you need to know ahead of time, like what does that entail? how long is it going to take? I had to have a special person come out that had to be able to go look at this property and certify that it was done correctly. So understanding yet who your end buyer is going to be. And also it helps you on the front end because I bought that property, assuming that was already done, which means I definitely paid more than you would have probably paid for a mobile home.

Starting point is 00:34:40 And so selling it on payments probably wasn't an option. So knowing these things on the front side can really help save people from getting themselves in a sticky situation with a mobile home. I hear about it all the time. Just people don't mean, even small things like the wind zones or, yeah, the title that you didn't think that you needed anymore, but you do and things can jump up and bite you. So, John, tell us a little bit before we get out of here, what listeners who are considering moving into this asset class should consider before making a purchase? Lean on someone else that has done this.

Starting point is 00:35:09 Because this is sort of an odd animal, there are things. that you can be trained in with real estate that you came into this mobile home investing that you didn't know. And there's so many moving pieces in these deals. A deal can be a straightforward, simple one. Everything's going your way and there's not much hurdles. And usually it's the deals that have a lot of hurdles that make us the most money. There's things to watch out for, things that I've been bit by because I just didn't think that this could even be a real problem. So I guess get educated or lean on someone that is doing this in your local area or that that that will help you. Ask questions.

Starting point is 00:35:51 Ditch the ego. Just because these are mobile homes, you can still lose a ton of money. I mean, that's the first thing that comes to mind because there's not like a blanket answer that says, you know, if you do this, you will be profitable. All right. Great. Well, thank you for sharing your experience and insights with us, John. We appreciate it. Super happy to.

Starting point is 00:36:09 I could talk about mobiles all day. Okay. Time for one last quick break. but we'll be back right after this. People love to call real estate passive income, which is interesting because most of the investors I know are very busy. Busy finding deals, busy managing teams, busy worrying they pick the wrong market.

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Starting point is 00:39:19 Indeed.com slash rookie. Just go to Indeed.com slash rookie right now and support our show by saying you heard about Indeed on this podcast. That's indeed.com slash rookie. Terms and conditions apply. Hiring Indeed is all you need. Welcome back to the Bigger Pockets podcast. If you all couldn't tell, I wasn't really a huge fan of John's early strategy and approach to investing. It sounds like his first few years, he was making some bad decisions that put his

Starting point is 00:39:51 tenants in a bad spot, and he was pretty open about that. So we appreciate that from John. Basically, I sort of cover this in the intro of the show, but what was going on was John was not doing a great job of screening tenants, and he was repossessing properties that tenants thought they were going to buy, and that certainly increased his cash flow. but it left his tenants or previous tenants in sort of an unfortunate situation. It sounds like fortunately, John has improved in that regard and is now more successful and actually getting the people who enter into rent to own situations with him to actually

Starting point is 00:40:28 own those properties, which I was very glad to hear because I'm just a huge believer that real estate investing should be mutually beneficial, that investors can still earn great returns and tenants can still have a safe, comfortable, great place to live. It sounds like John got there eventually, which I'm glad to hear because really believe that no one needs to lose. Thank you all for listening. Hopefully you learn something from this episode. For Bigger Pockets, I'm Dave Meyer. He's Henry Washington and we'll see you for another episode soon of the Bigger Pockets Real Estate podcast. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform.

Starting point is 00:41:30 Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own.

Starting point is 00:41:53 Any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. BiggerPockets LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.

BiggerPockets Real Estate Podcast - 976: How to Start Mobile Home Investing (The Right Way) for Just $15,000

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