Reselling the Home
OK, now we start making money!
You know how to find the park, evaluate a good deal, buy the deal, fix the deal, and now let’s get this thing sold!
We are looking for passive income for years to come, and we do this by selling the home using owner financing, or through a rent to own.
What is the difference?
Rent-To-Own vs. Owner Finance
Like we stated in the video above, there are some fundamental differences between selling your home on a “Rent To Own” deal vs. selling it via Seller Finance.
We believe seller financing give you the best protection and produces the most profit with the least amount of effort.
Below I will go over the differences between the two different ways to structure the deal.
Rent to own is essentially a rental agreement with a separate “option to buy” contract, similar a lease option.
- Lease Agreement
- Option Contract
- Eviction process may be a little easier
- Simpler way to structure the deal
- Your name stays on the title which means you may be opened up for more liability
- Technically you are still responsible for taxes, insurance, & repairs. You can put in your rental contract that the tenant is responsible for taxes, insurance, and repairs, but at the end of the day, if anything ended up in court, you may still be responsible for these things.
Note: Some parks do not allow rentals. Some park managers/owners will hear “rent to own” and not allow it because they perceive this as a rental. That’s why you need to present the deal as financing if you’re discussing it with the park manager or owner.
This will make your life a lot easier, trust me.
This is our preferred strategy for a number of different reasons. It’s just cleaner and will protect you better.
- Bill of Sale
- Promissory Note
- Not responsible for taxes, insurance, maintenance
- Your name is on the title as a lien holder, rather than an owner, so you have limited your liability (you are simply the bank)
- May be a little more challenging to evict/repossess depending on your state or city
- Need a Safe Act mortgage originator to actually create the loan for you
It is highly likely that your seller will default at some point over the course of the term. This is where the BIG money is made and the ROI goes through the roof!
As we’ll talk about in Module 6, when that happens, you get the tenants out and put more lipstick on it, and re-sell it with money down and monthly payments!
If the tenants dont pay, you can work out a cash for keys to get them out quickly and quietly. But a lot of the time they will just leave on their own free will (especially when they know the Sheriff will be paying them a visit to remove their stuff if they don’t leave).
Marketing For Buyers:
Marketing for buyers is similar process to marketing for sellers. At this point you should already have a list of buyers because we always want to be marketing for both at the same time.
Let’s talk about the best ways to attract buyers.
The moment you get a property, it’s time to begin marketing it. If it needs a lot of rehab work, then you can wait until the home is ready to actually show the home, but you still want to market and begin getting buyer leads.
I recommend that you actually start marketing for buyers well before you even have a property for sale
You can use ghost ads. Ghost ads are ads placed to attract buyers even if you may not have a specific property.
An example of a ghost ad is: “Rent to Own mobile home – must sell – no credit check required – down payment and monthly payments”
You can still get potential buyers to call you even though you may not have a specific property to sell them…yet!
Below are some great ways to market to find buyers:
- 1. Bandit Signs
Write, “Mobile Home For Sale 3/2 Rent To Own (your phone #)”
Use the scripts provided to screen your buyers by quality. Among the things you’ll discuss:
-Location they want
-How soon they need to buy
-How urgently do they need a place
-What can they afford for a down payment
-What can you afford monthly
-What specs are they looking for (beds, baths, sq ft, central heat/ air, etc)
- 2. Craigslist
Craigslist is a great way to sell mobile homes. Make sure you include pictures
**I rarely include price in the ad** I let them tell me what they can afford and work the deal from that angle. Many times, you will get more money up front, more cash flow monthly, and a higher purchase price and interest rate if you frame it like that.
- 3. Postlets
Postlets are great because it syndicates your post to websites like zillow, trulia, etc…
- 4. Youtube
I always take videos of the home and post them on Youtube with contact info in the description
You may not get calls immediately from this, but over time all your videos will start ranking and people will be calling you- great way to get leads. And I always include the Youtube video links in all my online posts. This way, they have a clear idea of the home before setting a time to view it.
- 5. Refer a neighbor program
This is a great lead source! People usually like to live near friends and family. So why not ask people in the park if they have any friends or family that would be interested in the home you have for sale?
We'll usually print up enough fliers to give to everyone in the mobile home park. It should have details of the property and pictures of the interior to increase response.
$150 is a standard referral fee that we pay out. But you can adjust it based on your situation. Either way, it ends up as a win-win. You get highly qualified leads calling you, already very interested in the property, simply because it's near one of their friends or family. And the referrer gets a nice cash bonus on top of it all.
- 6. Referrals from other investors
We all work together in my area. Every time we have a deal I call the other investors to see if the have a buyer and give them a nice referral fee.
This is great because if all I did was market for buyers and didnt have any homes, I can still monetize my leads with other investors’ properties.
- 7. Your Buyers List
Go through your buyers list and call/email all the ones who may be interested based on the info you have already gathered
Always, always, always, write down all the information from any prospective buyer!
Screen them using the buyer script we have provided for you.
I put them into a database on my computer and I also keep them in a file folder
Separate them into different categories based on what type of buyer they are. Cash Investor / Retail Cash Buyer / Tenant Buyer
This way you are ALWAYS growing your buyers list.
And when a new property comes into your inventory, you may already have the buyer in your back pocket!
When selling these homes, I recommend putting a lock box on the door. The last thing you want to do is continually show the property to a bunch of tire kickers.
I make most of my prospects do a drive by so they make sure they like the park and peak through the windows to make sure this is what they thought it was. If they are still interested I either schedule an appointment or give them the lock box code to get into the home.
You could also talk to the neighbor of the home and tell them that you are selling it and want to make sure the home is safe
Ask them if they can look over the home or maybe even show the property to prospects. Give them the lock box code and get their cell phone #. Tell them that when the home sells you will give them a couple hundred bucks for their service
The Step by Step Process To Close With Your End Buyer & All The Paperwork
Okay so you have marketed for buyers, shown the property and someone has said, "Yes, I want this home". You agree to down payment, monthly payments, length of payments, purchase price, and interest etc…
Now you will use another bill of sale, one that is more favorable to you as the seller, without all the escape clauses!
The only escape clause the will have is it being contingent on them being approved by the park
You don’t want to use the same bill of sale you used to buy the property, because that favored the buyer (you) heavily. The bill of sale you use to sell your home needs to favor the seller (you) more so than the buyer.
So here is what you do:
- On that Bill Of Sale, you include the contingency of them being approved by the park. Give them a couple days to get this done. Typically it can take 24-48 hours depending on the park.
- You need to know the main rules of the park so you can prequalify them before they waste your time. If they don’t meet the park standards, then dont accept a contract or money. It’ll save you a lot of time and energy.
- Some parks dont allow certain types of “dangerous breed” dogs, so find out if they have animals and if so what breeds and what size.
- Once you prequalify them, you want to take a non-refundable deposit. I try to get the entire down payment, if possible. If you cant get the entire down payment, get as much as you can.
- Tell them that if the park doesnt approve them they will get a full refund (explain this clear as day to them and also have those words in the contract.
- You MUST get a deposit (preferable cash or certified check). The last thing you want is them to back out last minute because they have no skin in the game or because they found another place to live, so the deposit is crucial. This way, if they get approved by the park and for whatever reason decide not to buy, you have been compensated for your time by keeping their deposit. And it’s a nice boost to your ROI on the deal if they back out.
- Now both parties sign the bill of sale and the clock is ticking. They have “x” amount of days to get approved to complete the transaction. I normally have the park rules and regulations on hand for them along with the park approval application. I hand these documents to them and tell them to head to the park office to submit their application.
If they are approved by the park, most likely they will have to at least come up with a deposit and first months rent (if not more than that). So make sure you tell them about the upfront fees required to sign the lot lease with the park, and work this into what they can afford as a down payment.
If they don’t know the fees associated with the park, and they gave you all their down payment money and can’t afford the lot fees, it will squash the deal. So make sure you account for this. Both parties should know about it when negotiating.
After The Park Approves Them…
So they have given the park their deposit and 1st months rent, and signed the lot lease agreement.
Now it’s time to meet back up with them to finish the transaction.
If you didn’t collect all their down payment upfront, now is the time to collect the rest of that money. Now is also the time to execute the promissory note (we recommend doing this with a notary).
Then, go ahead and take the bill of sale and the title to the DMV with them.
We need a new title with their name on it and your name or company as 1st position lien holder. You’ll also need to take them to the tax assessor’s office and get a new tax decal in their name.
They will need insurance on the home, at a minimum amount of the balance of the loan you gave them. This protects you in case of fire or other serious damage. Give them your provider if you have one.
**It is vitally important they give you proof of insurance and speak with your attorney/insurance agent on how to be put on the policy as loss payee.**
Make sure they give you proof each year that they have renewed the insurance policy and have paid the taxes.
Make sure you tell them repeatedly that they are responsible for taxes, insurance, and all repairs. Make sure all this is also clearly stated in the bill of sale. Clear communication will save you a lot of time.
You need to train them right up front, in no uncertain terms, that this is now their home. You are simply the bank. All responsibility now lies with them, as the new owner.
Hand them the keys, and just like any agreement, make sure they know where to send your checks!!
I highly recommend a P.O. Box, even if you have an office. One thing’s for sure, though- never give them your home address. This is to protect yourself in the future if any disagreement were to occur.
Now all the hard work is done and you will reap the rewards of your hard work for years to come!!!!
How fantastic is that!?
You did the work one time, and will be getting paid every single month for years!
Just because you are marketing the home with seller financing doesn’t always mean people will buy this way!
Countless times, I have marketed places via seller finance and ended up selling the home for all CASH and put a really nice chunk of change in my pocket.
Remember, value is subjective, and some of these people actually have all the cash! This is a great way to make a quick $5-10K or maybe even more! Be flexible!