After recently attending a real estate investors’ educational weekend I came away with the strong understanding that many folks are interested in investing in areas outside of their home location. The reasons for this vary, however typically boiling down to a non-favorable local real estate investing environment in the real estate investor’s home territory.
The purpose of this article is to educate you to the realistic possibilities of investing in manufactured housing outside of your comfortable driving territory. Below you will find some of the typical weekly and daily activities of an active mobile home investor. We will then discuss how these activities are affected when performed from a distance hours away.
1. Finding Leads Hours Away
Some leads you will absolutely be able to find without any boots on the ground. You have access to the same Internet that everyone else does who may be looking to purchase used mobile homes in your desired area. Online sites such as Craigslist, Backpage, and Zillow are popular databases to locate current sellers.
The Reality: Without employees on the ground or a partner with a vested interest in each deal, you will likely be missing out on many profitable mobile home seller leads. Personal mobile home investing experience has taught that a majority of closed leads do not come from the Internet and are not publicly advertised. Many leads are found before the general public even knows the home may be for sale. This may be done by being well-known in the area with consistent marketing, networking, and meeting with parks and sellers to make regular offers.
2. Talking with Sellers Hours Away
Talking with sellers and understanding their situation can absolutely be performed successfully over the telephone. An investor may also be able to build reporter, negotiate, and receive email pictures of the property without ever meeting the seller face-to-face.
Some mobile home motivated sellers will absolutely be willing to close with a potential buyer (you) without ever meeting you. These sellers will be more concerned with getting paid and less concerned with your wants. In short introducing yourself, building rapport, making offers, negotiating, looking over pictures and more can all be done successfully over the phone.
The Reality: Even with the amazing innovations of Skype and Facetime to show ourselves to someone across the world, having you or your business partner physically present to meet sellers face-to-face and be present to shake hands with a seller can be tremendously important to many sellers. This face to face time and trust building is almost crucial for a monthly-payment purchase offer to be accepted.
3. Due Diligence when Purchasing
Even to this day I often mtimes need to see things for myself in order to believe them. The next best thing to my own eyes inspecting a mobile home property is someone I trust or have trained to inspect the property. This person could be a trained property inspector, trusted handyman, several different handymen, and/or a partner with a vested interest in the property.
Pro Tip: If you hire someone hourly to perform your due diligence make sure to verify everything they are looking over for your first few deals. Hourly employees are not nearly as invested in a property’s outcome as a partner that is splitting profits/expenses with you.
4. Funding Out-of-State
In theory money can be sent all around the globe. Whether you are funding the deal yourself, utilizing the help of a local credit union*, or borrowing the money from uncle Frank’s IRA this can be done from almost anywhere around the country. *It certainly could be helpful to be local when working with a local credit union to help fund your investing deal.
5. Closing Out-of-State
One final walk-through is advised before closing on any investment property you are purchasing. This may be outsourced to someone you trust or professional inspection company for a fee. Additionally, unless you are using a closing attorney, escrow office or title agent you, your partner or employee should be present to make sure all paperwork is successfully signed and keys are taken before money is handed to the seller(s).
Pro Tip: If purchasing within a pre-existing mobile home park remember that many park managers will allow you to start the approval process via the phone and Internet, however many communities will insist that you (or your partner) are able to meet and sign a copy of the park’s rules, regulations, and lease agreement before purchasing the home.
As it was mentioned by Val and Gina in the video above many closing forms you will create and sign can be emailed and electronically signed in moments over the Internet. For other forms that need an original, a courier service or even FedEx may be available to overnight closing paperwork back and forth across the country.
The Reality: In many states the buyer may need to be present at the time the title is transferred into the new buyers name. Besides this inconvenience, signing forms can be done from almost anywhere in the world given enough mailing time or access to the Internet.
6. Repairs and Outsourcing
Many investors I speak with have already come to the realization that they will be hiring someone more experienced than themselves to perform manual labor and make the needed repairs on the property. While paying someone to perform repairs is the easy part, finding and managing a quality handyman or contractor that shows up and performs-as-agreed may prove difficult. Having someone local on the ground to report back to you with pictures daily may be crucial. This person can be the local community manager, a neighbor, a business partner or the handymen themselves.
Pro Tip: Understand your exit strategy and know what your buyers want. Do not make unnecessary improvements that will not bring back their cost plus a noticeable profit.
7. Reselling/Renting & Screening Buyers from Abroad
Your selling game-plan and selling-funnel can all be created and thought of inside your personal home. You can have sellers call you directly or you can send them to a selling agent or prerecorded phone message describing the property and qualification details. You may then certainly be able to have the potential tenants or buyers walk through the property with the help of a lockbox on the front door and even fill out an application online, paid for with their own credit card. In the modern age you may likely never have to meet a tenant or tenant-buyer before the closing date unless desired by you or the tenant.
Pro Tip: Utilizing the help of a property manager and online tenant screening service can be extremely valuable to streamlining your renting/selling process. The help of a qualified mortgage loan originator will be equally as important for screening buyers and preparing paperwork when reselling a mobile home with owner financing.
8. Signing Papers with your Renter or Buyer
Very similar to when you are purchasing your mobile home property this may be done remotely via the Internet, mobile closer, or overnight delivery service.
In Reality: Signing paperwork with a renter or tenant-buyer is a crucial moment to flex your authority muscle. Whether you will be present or outsourcing the signing of your paperwork make sure the “owner’s representative” be on your same mindset page. During this paperwork signing it may be prudent to project a very “tough but fair” business attitude with regards to yourself, however your company and partners are not as generous as you are and they are the ones in charge. In short use this closing time to instill some realistic fear/concern as to your company’s willingness to evict in the unlikely event your low-risk tenants ever default or miss a payment without communicating with you.
Occasional issues may arise however if the mobile home is located in a pre-existing mobile home park then many of these issues may be solved by the current park manager. Having someone local to post notices, knock on doors, inspect possible repairs needed, and even drive-by properties can be super valuable to your day-to-day business. Possible help to outsource can be local property management companies, experienced realtor friends, friendly neighbors/park managers, semi-experienced family members, or a vested real estate investor partner.
There are so many ways to make money through real estate investing, and many of them produce results when correct action is taken consistently. When investing in mobile homes outside of your comfortable driving territory you give up the ability to be on location is much as you may like to be. Before proceeding forward make sure you truly understand not only what will be required when things are going good, however what actions and responsibilities will be required when things do not go as planned.