The previous article on mobile homes as an investment opportunity describes the possibilities and the numbers behind this short term investment strategy. Now we will focus on finding mobile home (Wobbly Box) opportunities.
Finding opportunities in any real estate scenario is, arguably, the most important aspect of thriving in the industry. Even if it is not the most important, it IS the first step. If you don’t find a real estate opportunity, there is nothing to finance or analyze, and certainly nothing to close. Three important components of any real estate strategy are:
- How repeatable are the components of the strategy?
- How scale-able are the components of the strategy?
- How much will it cost to implement the strategy?
Repeatability is a measure of ease of adapting a strategy component to different criteria.
Using the Deal Board to locate high probability prospects is an example of repeatability. Once you find a list that works in one zip code, you can simply change the search to include another zip code and repeat your process. All it takes is a couple of mouse clicks to generate a new high probability real estate prospect list. On the other hand, if you are standing in a grocery store line and happen to find an opportunity while talking to the person behind you, it would be hard to make the case that the finding technique is repeatable. How many grocery store lines are likely to have potential customers next to you in line? The answer is probably more than zero but less than a million … a really wide range. Finding one real estate deal in a grocery store line is luck, but luck is not repeatable.
Scale-ability is a measure of the ease of implementing a component without a proportional increase in your effort.
An example of scale-ability would be writing a direct mail letter that works well based on the measured results of a small mailing. It is easy to mail merge that letter to a much larger mailing list without doing much more work. It’s easy to go from 100 to 1000 with a small amount of additional effort. By contrast, every phone call made to a prospective seller will take about the same amount of time and effort. Making two calls will take about twice as much time as making one. If this were a component of your strategy, there would be a limit to the number of calls you can make in a given time period and would be scale-able in proportion to the amount of time you allocate to making calls.
And finally, the cost of implementing the strategy is just that, how much it will cost you to work your real estate plan. Whatever the cost, it must be reconciled back to your budget.
We go more in-depth about these aspects of marketing and more in the OTA Real Estate Wholesaler class. I’d love to see you in my next online Wholesaler class which meets October 26 – 29. Or better yet, talk to your center about staging a live class in your area. In live classes, we really dive into the local real estate market and go deal prospecting, finding deals in class and making live calls to sellers.
How to Find Mobile Home Opportunities
An effective way of finding Wobbly Box’s (WB’s), similar to the For Sale By Owner strategy taught in Wholesale class, is to browse ad’s in throw away ad newspapers or Craig’s List. There can be a lot of opportunities in these venues if you are willing to sift through the advertisements. This method:
- Is repeatable … all you have to do is sign on to Craig’s List and search the real estate section, or pick up the throw away ad paper, many of which now have online search capabilities. Every week there are likely new real estate prospects advertising, so once you figure out how to do an effective search, you can do the same thing again and again.
- Is proportionally scale-able according but limited to the amount of time you have to spend on it.
- Is free! Budgeting is no worry.
I prefer to find opportunities via referrals (a.k.a. Network Marketing). The fastest path to cash is certainly direct marketing using a method such as that described above. In the long run, figuring out how to get prospects to call you, rather than you having to call them, is the ticket to building a business as opposed to having a job. My preferred WB marketing strategy is as follows:
- Use the deal board to find a mobile home park near you. Ideally, the park will have at least 100 spaces, but you’ll have to go with whatever is available near you. The spaces must not be owned by the person who has the WB. Rather, the WB owner must rent the space from the park owner.
- The target market will be older single wide mobile homes, which some crafty marketeer later renamed manufactured homes. The definition of older can vary with geographic area, but 1980 or older is a great place to start; the older the better. Further, the park ideally will have a majority of this type of WB. If there are a lot of newer models and/or double wides, the opportunities will decrease. We’re looking for junk!
- PERSONALLY (face to face, not on the phone and not via a letter of introduction sent by mail or email) introduce yourself to the mobile home park manager and let them know that you buy old mobile homes and resell them to qualified buyers, and that you provide the financing for the buyer. You will likely be the only one who has ever contacted the manager for this purpose.
- The manager will require you to have your customer (the person to whom you sell a WB) to be approved. The park owner is very likely to run at least a credit check on the potential occupant. Thus, when you find a prospect to sell a WB to, have them get approval from the mobile home park manager before you close the sale, thereby getting someone else to underwrite your deal. If the buyer happens to be a deadbeat, the park almost certainly won’t allow the buyer to rent a space, which offers you an additional (and FREE) layer of security.
- Follow up your personal contact with a letter and your business card reiterating what you do. If, after a month or so you get no referrals, go back to the park and re-introduce yourself to the manager. There is a big turnover in mobile home park managers, so you want to make sure the person you originally contacted is still there.
- If after two visits and a letter you still get no referrals, move on to another park.
- On your first visit to the park, when you meet the manager, drive every street in the park and look for For Sale signs in the windows of the mobile homes. Even if you are unable to meet the manager or are not successful at adding the manager to your team, you’ll often find deals just by driving around the park. Due to the expense of operating a vehicle, I would not make a special trip to look for mobile home for sale by owner signs, but any time you need to go to the mobile home park, take the opportunity to scan for signs.
This strategy is repeatable. Once you build a process to work a park and get one park under your belt, look for another and do the same thing. It is proportionally scale-able, so you won’t gain an advantage due to scale-ability. However, you only need one or two parks to buy all the WBs you can handle. Further, your prospect is the park manager, not the individual WB seller. While adding a mobile home park to your prospect list will take about the same amount of time for every park added, each park has the potential to yield 5 or 10 opportunities per year. In other words, each contact you make has the potential to generate many opportunities. This concept is what Network Marketing is all about.
As for the budget, it will cost a bit more than the direct marketing strategy outlined above because you will have to drive to the park (don’t forget to budget the cost of using your vehicle … it is NOT cheap!), and you will have minor but non-zero direct mail costs. Further, you will have to spend time, which also is not free, to develop and implement your contact strategy. Part of your strategy must include following up with every park manager so that you can maintain your relationship. However, the costs of implementing this strategy will free you from the constant requirement of looking through ads and making calls. Once you get a park or two, depending on your volume requirements, the cost and time you spend will be near zero. Your prospects will call you, rather than you having to call them. In class I call this provoking your phone to ring.
All you have to do to make this strategy work is to get out of your comfort zone and visit the park manager. Stealing an idea from my friend and OTA colleague, Dr. Woody, you should strive to get out of your comfort zone a little every day. Push your limits. This is an excellent (money making) opportunity to do just that.
In the next installment, I will wrap up the Wobbly Box strategy with some gotchas and pitfalls, as well as how you might effectively use this strategy to help you build your wealth.
Until then, may all your finding efforts produce deals!