The Future Of Mobile Homes/Parks?

Hi Folks,

In checking through my files, I came across this article from several years back. I think this would be a good time to run it again, since nothing has really changed. And while it was directed toward the Manufactured Housing business (Mobile Homes) it applies equally to the current housing industry, as well.

This article originated on one of the web-sites when someone asked what the future held for the Manufactured Housing Business and Mobile Home Parks. This was at a time when financing for new mobile homes had dried up and almost impossible to get. So the Manufactured Housing business was faced then, with the same problems as the housing industry is today…no financing This was my response, and my opinions to the questions and comments from that article.

“What Is The Future Of Mobile Homes/Parks”?

In my opinion, the mobile home lenders got what they deserved. They allowed greed and stupidity to replace common sense. Now they’re paying the price. Common sense will tell you (if you listen) that if greed is the influencing factor in your decisions, you have a recipe for disaster. Any loan officer what a pea sized brain should have known that making a 95%-98% loans, to bad-risk, non-qualified applicants, on a product that depreciates faster than the payments can keep up, (new mobile homes) is a recipe for disaster.

I think it was more the lenders fault, than the buyers, for loans going bad. If the lenders had shown more responsibility in their screening, and not have put the wrong buyer in the wrong home, with financing they couldn’t afford, things would have been a lot different. If you make mobile home loans, one of the key elements should be to match the right home, with the right buyer, with affordable payments. Otherwise, you have created a problem for both you, and your buyer.

So what does all of this mean for the private Lender/Investor/Lonnie dealers? The lenders have provided you with a very good lesson in what Not to do. Now, should you just let their valuable (and expensive) lesson go to waste? No! Use that lesson to your advantage and turn it into some money making opportunities. Just think of all the good prospective buyers out there who need affordable housing, but can’t get financing. Folks, the lenders have used their “creativity” and created a golden opportunity for you. Take advantage of it.

“The Days Of The Millionaire Park Owners Are Numbered”
(By Phil)

I disagree with Phil’. In fact, I feel just the opposite. If I were starting all over, knowing what I know now, I would be buying every mobile home park I could get my hands on. And I’ll bet I could keep it 95%-100% occupied, with very little time and management problems.

There still is, and always will be, a big demand for affordable housing with affordable financing. And I’m convinced that manufactured housing, especially used housing, will continue to play a big role in filling that demand. And regardless what others may think, I still believe that a mobile home park is the nearness thing to a gold mine. Let’s see if I can make my point.

In most parts of the country it’s next to impossible to develop a new park. But even if you could, it would take a ton of money, lot’s of your time, energy, aggravation, dealing with all the zoning and environmental issues, inspectors, etc. Then once you finally get the park ready, you start out with a 100% vacancy. Does this sound exciting to you? If so, go for it.

So what does this do for the existing parks? It makes them that much more valuable. Look at it this way. If you had the chance to buy a good income producing park that’s already existing, knowing that the local bureaucrats will prevent any other competitors from developing another park near you, wouldn’t you want to jump on it? The government is keeping all your competition out of the game, so it’s like having the only well in the desert. What other type business do you know of where the government will run interference for you and keep competitors out?

“The Cat’s Out Of The Bag”
(Comment from Phil)

Phil says that with the Internet, the “cats out of the bag” with the ease of gathering information on buying a mobile home and placing it on private land, rather than in a park. Well, I don’t think the cats ever been in the bag. It’s common knowledge that given a choice, most mobile home owners would prefer to have their own land, rather than be in a park. And I’ll bet that every one of my tenants would prefer their own land, rather than paying me lot rent. The Internet isn’t offering anything they don’t already know. So why don’t they buy their own land? For the same reason they don’t buy that $200,000 stick built house they want. Lack of money and the inability to get financing.

So they keep paying me lot rent, and keep on wishing for that 5 acres in the country. I have one tenant that’s been wishing for that 5 acres for 13 years. When I first bought that lot, her rent was $180. It’s now $315. And guess what? She’s still wishing for that 5 acres, and still sending me $315 every month. And I don’t see any change in the future. Why doesn’t she buy her 5 acres? Who knows? Probably because it would be more painful for her to do what it takes, to buy what she wants, than to keep paying me $315 every month. She’s in her comfort zone, and hopefully will remain for another 13 years.

With no foreseeable shortage of tenants like her, could I buy a park today and still become financially independent? You bet I could. So why aren’t more of you folks doing it? Why aren’t you taking advantages of all the opportunities staring you in the face every day?

Based on what I’ve seen in my lifetime, I believe the majority of the population will always have a champagne taste, and a beer wallet. If they could afford to buy their own piece of land, they would. But since they can’t, what are their choices? They can rent a house, apartment, or buy/rent a mobile home on YOUR lot. So yes, I think the future of manufactured housing, and parks, will not only be excellent investments for many years to come, but will offer even more opportunities to the person who is willing to learn the business and take action!

“I Defy Anyone To Show How The Mobile Home Park
Will Make A Comeback In Our Lifetime”
(Words of a poster)

Come-back? They never went anywhere. The parks I’m familiar with are not only producing excellent cash flow, but rents are increasing every year with very little, if any, occupancy change.

Interest rates are lower today than they have been in years, yet most people who want to buy a house can’t get a loan. Bingo! Enter the used mobile home (Lonnie dealer) with affordable financing on a used mobile home and you have the recipe for financial success. So I’ll place my bet on parks and used mobile homes being an excellent money making investment for years to come. (But I do vote against trying to develop a new park, for the reasons mentioned).

“How Long Will Manufactured Housing Be Around, And How Long Will It Be Profitable?” (Question from a poster, and my answer)

• For as long as there’s a demand for affordable housing.
• For as long as people find it easier to stay in their comfort zone, than to make the effort and sacrifice to do better. (My tenants)
• For as long as the vast majority of the population refuse to develop and practice financial discipline and self-responsibility? (About 90%)
• For as long as our elected officials continue to send well-fare checks (oops, it’s now a stimulus check) to able bodied people who can, and should work, but won’t.
• For as long as people keep buying new cars, with payments they can’t afford, but won’t buy a house to live in.
• For as long as people keep buying “stuff” they don’t need, with money they don’t have, and charging it on high interest credit cards? (And making minimum payments every month)
• For as long as people choose to hock their future to pay for their present.

These are just a few of the reasons why I feel that manufactured housing and mobile home parks will be alive and well for a very long time. After 19 years in the business, I’m still convinced that it will continue to be one of the most unrecognized, yet one of the best and most profitable businesses in the country. And also, since many investors, or would-be investors, feel this business isn’t glamorous or sophisticated enough for them, it will continue to be an un-crowded field with many opportunities for the few of us who do understand the business.

After all, how could that “Wall Street Investor”, “Banker”, “Certified Financial Consultant” or “Stock Broker” belly up to the bar in their country club and brag about making 87% selling an old, ugly mobile home? Or heavens forbid, (after a few drinks), slip up and admit they own a mobile home park. What would their peers think? Why that would be grounds for revoking their country club membership. But In the meantime, we mobile home/park players wait for the mail carrier and take our checks to the bank.

Happy investing,

Lonnie Scruggs

Start the New Year Right!

Hi Folks, I was just reading some of my notes and quotes that I've complied over the years and thought I'd share some of them with you. Most were obtained from various speakers/teachers/writers of motivational tapes/books/seminars etc. Hope they have the same positive impact on you, as they did for me.

• If you're not getting what you want in life, take a good look at the reasons (I call them excuses) that are preventing it.
• There comes a point when you have to stop making excuses and start taking action that will get the results you want.
• We hold on to bad habits because we're not really committed.
• Make a commitment that will force you to take action.
• Doing nothing is a decision to stay where you are.
• Know what you want, and be willing to give up something to get it.
• Take control of your life, or someone else will.
• Financial struggle is often the result of people working all their life for someone else.
• You must be able to recognize the difference between a goal and a fantasy.
• Don't be afraid to make a mistake, that's when you learn your best lessons.
• Don't let other people do your thinking for you, learn to think for yourself.
• People that don't understand how money works, will always work for people that do.
• Most people are in debt from the time they leave school until they die.
• If your only source of income is a paycheck, your livelihood is entirely dependent on your employer.
• Only 2% earn over $100,000 yearly.
• Where are you now? If you lost your job tomorrow, how long could you support your family on your present assets?
• If you do the same thing this year, as you did last year, where will you be next year?
• Minimum effort equals minimum wages.
• The type of people you spend your time with determines your future.
• Social Security checks are the major source of income for 66% of retired people. Average SS retiree gets less than $1,000 monthly.
• Our lives are a reflection of our habits, and what we study. What are you studying?
• If you spend tomorrow's earnings for today's toys & pleasure, you'll always be broke.
• Your thoughts will make you rich, or keep you poor.
• What we know is so small, compared to what we don't know.
• It's not the things you do that you regret the most, but the things you didn't do.
• When you stop learning, you start dying.
• Some people make things happen, some people let things happen, some people watch things happen and some people don't even know what's happening.
• Hang around people who are smarter than you.
• Your financial future will be determined by the choices you make today.
• The best way to conquer fear is to meet it head-on.
• What you know is your greatest wealth. What you don't know is your greatest liability.

So, it's decision time. You can choose to be in the 5% bracket and learn how to enjoy financial freedom and security. Or, you can do like most folks do and settle for whatever your employer is willing to pay you. (Providing you don't get "down-sized".)

May this be your best year, ever. And it will be if you set the right goals, develop the right attitude, and practice the right habits. So with that in mind, let me ask you…”If you do the same things this year, as you did last year, where will you be next year?”

Have a great year,
Lonnie Scruggs
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Had Your FINANCIAL Check-up Lately?

Seems like there’s always somebody telling us we should get a physical check-up every year or so, but how about a financial check-up? Ever had anybody call wanting to schedule you for a financial check-up”. If not, and you haven’t had your financial check-up lately, then it’s time for one. Here’s a simple little test to see if you pass, or if you need a prescription for what ails you. Let’s suppose you finish school, play around for a couple of years, and at age 20, you settle down and get a “real job”. Using the example below, plug in your numbers in place of the ones in the example. First, you need to figure what your present net worth is.(And no cheating, or puffing).

Example:
Present net worth $100,000.
Present age 40
Subtract 20 (age you started working) 20
Answer 20

Divide the answer (20) into your present net worth ($100,000), and we see in our example that you have accumulated an average of $5,000 for each year that you’ve worked. Now, how do your figures rate? Are you satisfied with your answer? If not, what are you doing about it? Maybe now is a good time to ask yourself this question. “If I do the same things this year ,as I did last year, where will I be next year”? If you don’t like the answer, then it’s time to make plans to improve your score. So what can you do to improve your financial health? Let’s go over a couple of ideas that have worked very well for me.

Regardless what kind of job you have, how well you like your job, and how much that job pays, you need to have something producing income for you that doesn’t require you to be there. You should have cash flow coming in if you’re sleeping, fishing, on vacation, or too sick to work. If your only source of income is from your next pay-check, and you lose your job, how much cash flow will you have coming in? If you lost your job tomorrow, how long could you support your family on what you have now? These are serious questions you should ask yourself, and if you don’t like the answers, start making plans now for your financial future. So, what to do? “Hire” some “employees” to work for you. And what’s the best kind of employees you can have? DOLLARS!!!

I consider every dollar I invest another employee working for me. With proper management, each employee works 24 hours a day, 7 days a week. They never call in sick, they never go on strike and they never complain about working conditions. And my employees never have to worry about being “downsized” either. But if I get lazy, or don’t do a good job of managing my employees, my income will decrease, and maybe even stop. So you need to develop good financial discipline, and good management skills in order to get the most from your “employees”. Let me share a couple of my investments in order to give you a better understanding of what I mean.

Case #1. I paid $17,000 for a mobile home lot, and the mobile home. (Just the lots alone in this park sell for $17,000-$20,000). I expect to sell the mobile home for $6,000. Most likely the mobile home will be sold on terms with monthly payments for 2-3 years. So even though my mobile home employees are “temporary employees”, they will produce excellent cash flow. If I practice good financial discipline, I’ll use the cash flow they produce and find them another job before their temporary job runs out.

If I sell the mobile home for $6,000, that reduces the cost of the lot to $11,000. The lot will rent for $245.00 monthly, and net $210.00. (And the rent will go up every year with very little, if any, additional cost, and without me having to be there) These 11,000 employees will be long term, cash producing workers. And if I’m a good manager, they won’t ever get a day off. What a slave driver, huh? If I do nothing but bank the monthly cash flow, these 11,000 employees will provide a good yearly shot for my financial health. (Incidentally, we now have 25 lots just like this one, producing cash flow every month. And we don’t have to show up at a job to get paid. Our employees are doing the work, and we get the money. (Use this concept and do the same thing for yourself).

Case #2. Just bought another mobile home for $4,000, sold it for $8,900, $1,000 down, and a note for $7,900, payable $306.11 monthly for 30 months. So I have another 3,000 “employees” working for my financial health. (Just got the first check from this deal, and it made me feel warm all over. What a great bunch of employees).

This was another referral from the park manager. There was no sale sign posted, or any indication the home was for sale. If the manager hadn’t called, I would probably never have known this home was for sale. I can’t tell you how many deals this one manager has thrown my way over the years. And, I can’t stress too much how important it is to build a good relationship with the park managers. You should think of the park manager as the goose that delivers the golden eggs.

Case #3. Different park, same scenario. Again, no sale signs posted and no way of knowing the home was for sale. The park manager not only referred this deal to me, but practically negotiated the $2,500 purchase price with the seller. And then, convinced the seller to credit the security deposit he had on the lot, to me. The end result was that I paid $2,500 for the home, and got the $250 security deposit transferred to me, making my total purchase price $2,250. The home was sold in 10 days for $6,750, $500 down and a note payable $166.90 for 48 months. So I now have another 1,750 “employees” working for my financial health.

These three deals will produce somewhere around $1,000 per month, and I don’t even have to show up. Granted, the mobile home notes will pay out in a short time, but I’ll have plenty of time before they pay out to create more deals and put more “employees” to work. If I worked a “job” how many hours would I have to work to earn $1,000. Even if it was a job I liked, that job would be taking valuable time that I could be spending to create more cash producing deals like I’ve just described. And also, with a job, I might not be able to pass my yearly financial health exam.

I’ll cover one more idea for you to consider which will greatly improve your financial position, especially when you reach retirement age. And this has to do with the power of compounding. If you don’t fully understand the awesome effect of compounding, let me urge you to make every effort to learn and use that power. If you do, you will retire a rich person. If not, you have an excellent chance of winding up like the majority of the people that don’t understand and use this power of compounding...POOR.

Note: My new book, Taking The Mystery out Of Money, has a chapter on the power of compounding of interest. And also a chapter on how to use a financial calculator. Let’s do an example of a self directed IRA. Suppose you open an IRA at age 20, and you put $2,000 into your IRA each year for the next 10 years. Let’s also suppose that during this 10 years, your IRA earns 10% (I know you can learn to do much better, but let’s see what just 10% will do). After 10 years, your IRA will be worth $31,874,and you will be 30 years old. If you never put another dime in that IRA and just left it alone for the next 30 years ,and it averaged earning 10% each year, you would have a nest egg of $556,182 at age 60. So, to make it simple, if you invest $31,874 today, and it earns 10% over the next 30 years, that $31,874 has compounded to over a HALF MILLION BUCKS. Now, look at what it will be if you can make that same $31,874 earn 12%, just 2% more. At the end of 30 years, your $31,874 will compound to $954,942, almost double. At 15%, it will be $2,110,235. And if it’s the new Roth IRA, you won’t owe any taxes when you start spending your money when you retire. (Roth IRA contributions are made with after tax dollars).

Regardless of how you earn your money, you should invest at least $2,000 per year in some type of retirement fund and forget it’s there. That’s only $40 each week, so don’t say you can’t afford it. Face it, if you can’t afford to invest $40 per week now when you’re healthy and working, in order to be rich when you retire, then you had better do all the things you want to do before you retire. You won’t have any money to do anything after you retire. If you develop and practice good habits, have a good investment plan, and good financial discipline during your working years, you will never have to worry about failing your financial health exam. And the sooner you start, the better off you will be when you retire. Every month you wait will cost you many future dollars. Find your niche and get started NOW! The world is full of poor people that waited.

Best wishes for a great financial future,
Lonnie Scruggs
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How To Create A Money Machine

My ad read "Mobile Home For Sale--Will Finance" and the phone was ringing off the hook. Some of the callers didn't even bother to ask what the selling price was, or the interest rate. Most of them were interested in only two things: "How much down and how much a month"?
These are the type of people that will make you rich if you understand notes and seller financing. The financing alone will make you rich. But if you understand how to buy a product for wholesale, then sell that product retail and finance it, you will get rich much faster and easier. I've been doing this very thing with mobile homes for 19 years.

Making A Fortune With No Competition

According to the Bureau of Census Report, there are over 9 million mobile homes in this country. And because the used mobile home business is so unrecognized by most entrepreneurs and investors, the ones who do understand the business are making a fortune with little or no competition.

When you can buy a used mobile home for $3,000, sell it for $6,000, finance it and have the buyer send you a check for 2-3 three years, my calculator says that's GOOD ENOUGH. Mobile homes are the only affordable housing left for many people in this country, and the new homes are priced way out of the range of many who want to buy. High prices and the lack of financing is creating a tremendous demand for used mobile homes with seller financing. I've discovered the world is full of people who want to buy things but, since many of them don't have any financial discipline, the only way they can buy what they want is to find someone that will offer financing. And this is especially true for housing. Some people will never save $1,000. But if you set them up on a monthly payment plan, they can make you a payment for life. Let me illustrate by sharing a case history on an actual deal I did.

A 96% Yield

This couple owned and lived in a 16 year old, 14 x 64 single-wide mobile home located in a local park. They were moving out of the area and now needed to sell their home. After being assured by the park manager that the home could stay on the lot, I negotiated a purchase price of $3,350 for this home. I spent $132 for advertising, so I now had a total of $3,482 invested. The home sold in 17 days for $7,900. The buyer paid $790 down and signed a note for $7,110 with 12.75% interest, payable at $228.39 for 38 months. So I now have a note for $7,110 and I have $2,692 left in that note. Is my calculator lying to me, or is that a 96% yield!

I received 38 payments ($8,678) plus the $790 down payment (for a grand total of $9,468). Subtracting my original investment of $3,482 leaves a profit of $5,986. This all took place within 38 months. And all I had to do was wait for the mail carrier to bring the checks.

Do A Little Work One Time And Get Paid For 38 Months

Once I sold the home, my work was done. It was then time for the buyer to go to work to earn money to send me a check. And he gets to do it for 38 months while I can go fishing. An excellent example of how to make your money work for you, instead of you working for your money. If you will learn and apply this concept, you won't ever feel the same about working a "job" again.

This is just one of many notes I've been able to create over the past 19 years with used mobile homes. There was once a time when I could get excited about buying a real estate note paying 18%. But no more. My typical "Lonnie Deal" starts at 50%. And this is real world stuff, not fiction or pipe dreams. There might be something better, but so far I haven't found it. Mobile homes are "Money Machines." If you try it, I betcha you will like it.

Happy Investing,
Lonnie Scruggs

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How to Build Long Term Security

Finding and keeping a good long term customer does more for your financial wealth than a "One Shot-One Profit" deal. If you do one cash deal, you get one check. But a long term, good paying customer will make you payments for many years. So regardless what business you're in, if you want to be successful, you should focus on repeat business from your best customers.

I don't know about you, but I'm finding it harder and harder to find people with a decent credit history. I would guess that I wade through at least 12-15 calls before I get one that I'll even take the time to show a home to. I don't know if there are more irresponsible dead-beats in the world now, or if I'm just meeting more of them.

The bankruptcy laws are structured so that the debtor has all the rights, and the creditors have none. I can remember when it was very embarrassing, and humiliating if someone had to file bankruptcy. And they would try to keep it quiet and hope their family and friends wouldn't find out. But now days, people seem to think it's a status symbol, and brag about it.

I had a call recently from a young woman who didn't sound like she was more than 20 years old. When I asked about her credit history, she said "I just filed bankruptcy, and my lawyer said it would take about 90 days. Then I won't owe anybody, anything!"

She was so happy and excited you would have thought she had just won the lottery. I couldn't help but tell her that she was all mixed-up in her thinking, that she still owed the money. The only thing that changed was that she was able to use the judicial system to screw people out of what she owed them. Then I asked her why should I expect her to pay me, if she wouldn't pay anybody else. That wasn't exactly what she wanted to hear.
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The Value of a Good Customer

Here are a couple of case histories to illustrate the value of a good customer. I sold a mobile home to a couple about nine years ago. The home was, and still is, on my lot. I financed the home for my buyers for three years. When the note was paid off, they wanted to borrow some money. They said they could get the money from their bank, but would rather do business with me. (Wouldn't it be a terrible blow to your self-esteem if your customer said they would rather do business with a bank than with you?)

After learning what the bank terms would be, I let them name the amount they wanted to borrow, the interest rate, and the monthly payments. They dictated their own terms, (after a few questions from me) based on what they had been told by the bank. They gave me the title back, I gave them a check, and it was a "done deal". I didn't even have to leave my house to do it, and I now had a new loan with a 23% yield. (Maybe I should write another book titled "The Lazy Man's Way To Wealth.")

They've now paid that loan off, plus a lot rent payment every month. Now they want me to find them a newer home. I just checked my files on this one good customer. Over the past nine years, they've paid me over $38,000 in mobile home payments and lot rents. What if I had simply done a one shot deal with this couple, made one profit, and only got one check. How much would I have lost?

Stay in Touch with Your Best Customers

Each year, around the first of December, I mail some of my best customers a notice offering to make them a loan if they need money. I only made one loan out of my last mailing, but it's another monthly check. And it only cost me a sheet of paper and a postage stamp to do it. But who knows what that mail-out might generate in future business. Those folks now know they can get money from me, instead of a bank.

Two months ago, one of my customers needed to borrow $2,000. I made her the loan, added it to her mobile home note, restructured her payments so they were affordable, and I have another happy customer. And my mail carrier has another check to deliver.

Three years ago, I sold a mobile home to a couple. In addition to the mobile home payment, they've also paid me lot rent each month. So far, in just three years, they've paid approximately $18,000 in rent and mobile home payments. Yesterday, they called saying they had the chance to buy a double wide on a 1/2 acre of land. They want me to buy their home back and loan them the difference so they can buy the double wide. They said they could probably get the money from a bank but, like the other couple, they preferred doing business with me. If I help them get what they want, I'll probably be able to create another 6-8 years of payments from this couple. Plus, I'll be able to make a profit from their home.
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The Value of Monthly Payments

This week, I sold two mobile homes. One is a nice 14 x 70, 2/2, which sold for $11,900. My buyers paid $1,200 down and signed a note for $10,700, payable 12.75%, $261.42 for 54 months. If the note runs the entire term, I'll collect $14,116 in payments. I'll also collect at least another $14,000 in lot rent. I had approximately $5,000 in this home.

The other is a 14 x 70, 2/2 in not so nice condition. One bathroom needs a complete rehab, and the other bath has a cracked tub. I paid $2,260 for the home, and sold "as is" for $7,500. Got $500 down and a $7,000 note payable 12.75%, $331.97 for 24 months. I'll also collect at least $260 lot rent each month.

Suppose I had been able to make a cash sale on both these homes, how much would I have lost in profits? I could probably have found a buyer for the first home who could have qualified for a bank loan. And if that were the case, I would have made a one time cash profit of about $7,000. But then I would need to find somewhere to put that $7,000 to work. By selling on terms, I'll realize over $10,000 profit.

Considering the condition of the other home, no bank would have made a loan. But I was able to sell that home in less than a week, by offering financing and affordable terms. If that note runs the entire term, I'll collect $7,967 in payments, plus the $500 down, for a profit of $6,207. I'll also collect at least $260 lot rent each month. That's another $6,240, for a total of $14,207. And all I have to do is cash the checks.

Here's another important point I'd like to make. On the first deal, I've got approximately $4,000 earning me 75%. On the other one, I have $1,760 earning me over 200%. If I had sold both these home for cash, where could I have invested my profits to make these kind of returns? And also, I now have two satisfied customers who might be a source for future profits

Long Term Security

I see so many people who would rather settle for instant gratification, rather than long term security. You can spend your time, money and energy doing one deal, and get one check. Or, you can spend the same amount of time, money and energy doing one deal, and get checks for years. So rather than settle for instant gratification and one check, think long term, and get many checks. And once you have a good customer, with a good proven track record, hold on to them as long as you can.

Happy Investing,
Lonnie Scruggs

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Big Yields From Little Deals

I often hear people say they can’t get started because they either don’t have any money, or very little money. Just this week, Eric, a young man in our Real Estate Club, said he only had $5,000 and wanted to know how he could get started with such a “small” amount. I told him that the amount doesn’t matter, what matters is that he get started. And NOW!

Stop Thinking Like Average People

My advice to Eric (and you) is to stop thinking like the “average” person, unless you want to be average. The average person expects to work a job for 30-40 years, then retire on a “fixed income”…that somebody else fixed. If all you want out of life is to be average, just do what average people do. But I hope you set your goals to be much more than average.

The only real difference between rich people, and poor people, is the way they think. So start thinking in a different way, start seeing things in a different way, and start doing things in a different way. Start thinking like the entrepreneur that you were meant to be. Entrepreneurs don’t wait for deals, they create deals

How To Make 15%-20% The Simple Way

Making 15%-20% returns on your money is simple. And there are opportunities all around you if you will look for them, recognize them, and act on them. Every time you hear someone say that they need to buy something, but don’t have the money, you should consider that a potential money making opportunity.

There are always people who need to buy something, but don’t have the money. And because of their lack of financial discipline, they never will. But they can make monthly payments with no problem. So focus on these type people, and get in the financing business. That’s where the real money is. And it’s such a simple and easy way to create passive cash flow.

Some of my best customers are former tenants and people that bought mobile homes from me. Even after they pay the home off, many have called later wanting to borrow anywhere from $1,000-$5,000. And none of them have ever complained about paying 18%, or more, in interest. Most of them don’t even ask what the interest rate is. Also, most of them want the payment to be the same as it was on the mobile home.

Last week, a couple who bought a mobile home about 5 years ago, wanted to borrow $1,800.They volunteered to tell me they could pay $200 monthly for 10 months. Run those figures and see what my yield will be on that little loan.

I’m still doing business with a couple who rented an apartment from me over 14 years ago. How’s that for steady cash flow? Every time they want to buy another car, or pickup truck, they call me for the money. I’ve lost count of how many we’ve done.

Last month, I made a $1,000 loan to another one of my mobile home buyers who needed to have some dental work done. This week one of my past customers wanted to borrow money to get her Mama out of jail. Hey, I swear, I’m not making this stuff up. Folks, this is an amazing, amusing, and profitable business.

These are just a few of the many actual deals I’ve done. And my yield/return on all of them were at least 18%.

Most of them were much better.

Attention Landlords!

Here’s a simple way how some of you Landlords can create extra income from your tenants. What does your tenant do when they want to buy new furniture? Or that 48” TV? Or a new computer? They most likely put it on a charge card, or get the store to finance the purchase at 18%-21% interest. Why don’t you offer to finance what they want and collect that interest?

Let’s suppose you learn that one of your best tenants want that latest big screen TV costing $1,000. They won’t ever save $1,000, but they can make payments forever. You find out which TV they want, negotiate a 10% discount for a cash sale, and have it delivered to them. (If you can’t negotiate a 10% discount for cash, you need a seminar on negotiations).

You charge them $1,000, plus $75 “processing fee”, or whatever you want to name it. They pay the $75 processing fee, and sign a note for $1,000 payable $50 month for 24 months. What have you just done? You’ve just created a little note that will earn you 38%. Let’s go over each step.

You negotiate a 10% discount ($100) off the price when you buy the TV. It’s not hard to get a 10% discount for a cash purchase. But you do have to ask. Try it! You charge your tenant the retail price of $1,000, plus a $75 processing fee.

They sign a note for $1,000, payable $50 monthly, (more if you can get it) for 24 months. You now have $825 in a note with a face value of $1,000. What is your yield/return? Try 38%.

Profits From Prepayments

Here’s a neat way to make a good profit by prepaying part of a loan, a note, or your mortgage. Or any debt that you’re paying on. This normally won’t work with a bank or a mortgage company, but many times it will with a private note holder.

Let’s suppose you bought a $50,000 property from a private party. You paid $5,000 down and the seller carried a note for the $45,000 balance. And let’s say that note was structured for 20 years (240 payments), 10% interest, with monthly payments of $434.26.

If You Don’t Ask, You Don’t Get

If you pay each payment as it becomes due, you will have paid $5,211.12 after 12 months (12 x $434.26 = $5,211.12). Try this idea. Include a note with your next payment saying that you’ve accumulated some extra cash, or you’re getting your tax refund, or whatever, and you’re trying to decide the best use for it. Then ask your note holder if she would be willing to give you a 15% discount if you could prepay her next 12 payments.
If she accepts your offer, that means you would make her one cash payment now of $4,429.45, instead of 12 payments of $434.26. That’s a discount of $781.67 ($5,211.12 minus 15% = $4,429.45). Run the numbers and see if that isn’t a 31% return.

This technique will work the same on any type of debt payments you happen to be making, regardless of the size of the payments. Suppose you’re making monthly payments of $2,000 to someone. Would this same concept work? You bet it would. In fact, it might work even better. Someone receiving $2,000 monthly payments would receive over $20,000 cash by giving a 15% discount for 12 payments. That’s enough to activate people’s greed gland. Or, to buy that new set of wheels.

So make offers to everyone you’re making payments to. Where can you invest your money and make 20%-30% any easier? I once made seven offers like this, (15% discount for next 12 payments) and four were accepted.
This technique does work, but it’s up to you to make offers and make it work. But don’t expect note holders to make you any such offers. So try it with your next payment! You have nothing to lose, and much to gain.
Never let the mail carrier pass your house without leaving a check.

To your wealth,
Lonnie
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Generate Some Competition

Here’s a little selling technique that I’ve found to be very effective. I've written about this in my books, but it doesn't hurt to refresh your memory.

After screening numerous calls from my ads and signs, I "pre-qualified" three couples and scheduled appointments to show the home. But before I would agree to meet them for a showing, I required all of them to go through the park, check out the home and see if they liked what they saw. When they called back wanting to make an appointment to see it, I told all of them that I would probably be able to show the home Saturday afternoon, but wasn't sure. But I would call them Saturday AM to firm up a time.

Saturday AM, I called and scheduled appointments for all of them to see the home that afternoon. The first appointment was at 2PM, with the best of the three. The next at 2:15PM, and the other couple at 2:30PM. The reason for the alternate times was because I wanted to be talking with the best of the three, before anyone else showed up.

The first couple, who had already said they could pay cash, showed up right on time. They liked the home, and started negotiating. They wanted to know if I could sell for less since they would be paying all cash. They also wanted to know if I could give them a break on the lot rent if they paid a full year in advance. It didn't work, but I had to admire the fact that they at least tried to negotiate a better deal.

But they didn't know they would soon have competition.

About that time, in walks the next couple, and you could actually see and feel the change in the attitude of the first couple. It was amusing to see the look on their faces, and watch how they kept eyeing this couple. The second couple checked out the home several times, and kept waiting for me to finish with the first couple. Then, in walks the third couple. This couple did a quick walk-through, asked a few questions and left.

Seeing how motivated and serious the second couple was, the first couple never again mentioned reducing price or lot rent. No more negotiating. They signed a contract for full price on both the home and lot. (Isn't competition great?) Then I let the first couple hear me tell the second couple that I would call them in case anything should happen, or if this contract fell through. (This was Saturday, so it would actually be Monday before they could have the cash (cashiers check) for the home and lot rent. But they now knew if they didn't show up with the money, I had another buyer waiting. But they did have all the funds Monday, signed all the docs and it was a done deal.

As you can see, this technique accomplishes two things. First, if you require all potential buyers to check out the park and home, and then call you back for an appointment, you have a more serious buyer. This will greatly minimize no-shows. I hardly ever show a home unless the potential buyer has already seen the home and park. But even before you do that, you should pre-qualify your buyers to see if they have the necessary funds and qualifications to buy the home. Otherwise, you will waste a lot of time showing homes to people that are not able to buy, or not able to qualify for the lot.

Second, by having other potential buyers show up at the same time, you generate a feeling of competition between buyers. When one person sees someone else wanting the same thing they want, and there's only one available, they want it even more. So in many cases, like this one, you eliminate the negotiation process and get full price/terms.

Happy investing,
Lonnie
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NOT quoting an interest rate

By NOT quoting an interest rate when negotiating with your buyer, you can sometimes add several extra payments to your note, and increase your profit considerably. I'll cover one of my sales to illustrate what I mean.

This home was priced at $11,900. When talking with the potential buyers, I learned they could pay $1,500 down, and “about” $250 per month. If the note had been structured at the usual 12.75%, (the industry standard) I would be due 55 payments of $250.67, totaling $13,786. But since I had not quoted the buyers an interest rate, or the number of payments, I asked the buyers if 60 payments of $250 per month would work. It did. So I’ll collect $15,000, an extra $1,214. If you run the numbers, you will see that the interest rate works out to be 15.47%, instead of 12.75%. The difference in the interest rate is less than 3%, but it’s added five more payments to my note.

Were the buyers concerned what the interest rate would be? No, they never asked. Were they concerned how many payments there would be? Again, they never asked. Their only real concern was being able to buy the home with affordable payments. So, keep this tip in mind when structuring your next note. It will put more money in your pocket.

I’ve found that people who live by the “How much down, How much a month” mentality like things to be simple and easy. So instead of structuring a note with an odd payment amount, round it off to the next highest even number and adjust the interest rate. It makes it easier for them when they write the check, or get a money order.

To your success,
Lonnie
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Ask Questions And Make Money

If you’re running short of money, maybe it’s because you’re not asking enough questions. Especially when it comes to asking for discounts when you buy something. It’s amazing what results you can get sometimes by simply asking a question. Let me explain what I mean by sharing several actual case histories with you.

I had been looking for an anniversary gift for my daughter, Janet and son-in-law, Tommy. While browsing in a gift shop, Joanne spotted the ideal item...a bird cage in the form of a hot air balloon, hanging from the ceiling of the gift shop. Janet and Tommy own a restaurant-tavern by the name of Knickerbockers, and their logo is a hot air balloon. So this would be the perfect gift. When I asked what the price was, the clerk said, “$107.00” I used the “shock” technique and said, “How much?” She repeated the price and I said, “Wow, that’s a lot of money, you can do better than that, can’t you?” She hesitated a moment and said,”

Yes, I can give you a 15 percent discount. I mumbled, “15 percent, how much would that be, what would that make the price?’ She looked at the ceiling for several seconds and said, “I’ll let you have it for $89.00, that’s better than 15 percent”. I hesitated, mumbled the price several times and said, “hmmm, that’s still a lot of money, but I’ll take it.” Then I asked her if she accepted Master Card and Visa. She said she did. As I was just about to hand the card to her, I asked, “How much discount will you give me if I pay cash?” She looked at the ceiling again and said, “If you pay cash I’ll let you have it for an even $80.00.” Now it was my turn to be shocked, I hadn’t expected a $9.00 discount just for paying cash.

I usually don’t get more than 3-5 percent when I ask that question. (She didn’t know it, but I would have bought the thing if she had given me no discount.) So in about two minutes of asking questions and making comments, I was able to get a discount of $27.00 on a $107.00 item. For a minimum wage worker, that about 5 hours work. Talk about yield, plug those numbers in your calculator. Now for another actual case.

Another time I was in Barnes & Nobles book store. I picked out 5 books and placed them on the counter. The clerk was ready to start ringing the prices up and I said, “Now you do give a discount for this many books, don’t you? He just smiled and said, No, I’m sorry we don’t”. I frowned, looked very disappointed and said, “No discount? I always get a discount?” He finished adding the prices and when he quoted me the total amount due, he said, “Well, I went ahead and gave you a 10 percent discount”. The discount amounted to $15.46.

Just one simply question resulted in $15.46 staying in my pocket instead of winding up in the cash drawer. And it was fun, too. (That would be about 3 hours of work for a minimum wage worker.) Another time I was negotiating to buy a mobile home and asked the question, “If I can get you the money today, what is the absolute best cash price you will sell for?’ The seller dropped the price $2,000. One question equals $2,000. How’s that for efficient use of your time? Here’s another actual example of how asking questions gets good results. I was negotiating to sell a mobile home and the buyer asked, “How much is the down payment?”

I gave him my standard answer, “We don’t have a certain amount, it’s negotiable, but if it’s reasonable I’ll try to work with you. How much of a down payment can you make?” His answer was “$8,500”. I would have been happy with $1,000. (You need to learn how to hold a good poker face when something like that happens). Another time when I asked a buyer how much they could pay each month, the answer was “$400.” I would have been happy with $200.

Suppose I had already stated that I wanted $200, what’s the chances the buyers would have said, “No, we want to pay $400.” Several years ago we were shopping for three oil paintings for Christmas presents. After asking questions and negotiating the best price I could on one picture, I then asked the question, “Suppose we bought two pictures, how much discount will you give us?” When a price for two pictures was firmed up, (you guessed it) I then asked, “If we could afford to buy three pictures, what kind of a special price could you give us?” When the price for three pictures was established, I then used the “how much discount will you give if I pay cash instead of putting it on a charge card?”

We walked out with three pictures for the price of two. It was much easier to ask some questions and get a big discount, than paying full price. But how many people never learn to ask questions and don’t even know, or realize they can buy for much less by simply asking questions. If you haven’t been asking for discounts, or trying to negotiate better prices on items you buy, let me suggest you start doing it with your next purchase.

And don’t be shy about asking for discounts. The worst that can happen is that you don’t get it. But many times you will. So learn to ask lot’s of questions, especially when it involves your money. Always ask for a discount whenever you buy anything. You will normally need to negotiate with the person who has the authority to make a decision and grant the discount. If the employee you’re negotiating with has no such authority, ask for the manager or person in charge. Give it a try and I’ll bet you’ll get some pleasant surprises. It doesn’t always work, but then, what does?

Happy negotiating,
Lonnie Scruggs
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An Old Mobile Home Or Money In Disguise?

Fred was like most investors and entrepreneurs and had no idea that mobile homes could be a good investment and a great moneymaker. And what little he had heard about mobile homes wasn’t very flattering. But Fred read a book called Deals On Wheels about how you could make money with them and called me to get some more information. He wanted to know if he could visit with me sometime, buy lunch and see first hand just what I was doing. At 9 o’clock one morning, Fred shows up at my door and we went on a park tour.

The first park we drove through, I pointed to a mobile home and said, “Fred, take a look at that mobile home and tell me what you see.” This was a 15 year old single wide home. The paint was ugly, one section of the skirting was missing, a window pane was broken, a dog was tied to the steps and the yard would never win a “Yard of the month award.” I could sense that Fred wasn’t real impressed at what he was seeing. He looked a little puzzled and said, “ I see an old mobile home.” And to the untrained eye, that’s just what it looked like. There was nothing wrong with Fred’s eyesight, he saw exactly what I just described. But what he didn’t realize was that he was looking at money disguised to look like an old, ugly mobile home. Then I gave Fred the history on this home.

About two years before, I had bought this home for $2,700. I spent another $341 for advertising and minor repairs. My total cost in that home was $3,041. In less than two weeks, I had it sold for $6,950 to a young couple that needed an affordable place to live. This couple, like many couples, would never save enough to buy what they wanted, but they could make a payment every month for life. They paid $750 down and I took back a note at 12.75% interest (the industry standard) payable $191.07 monthly for 40 months. Now, let’s run the numbers and see how I made out.

We had $3,041 invested, received $750 down, leaving $2,291 in the deal. We now have a note for $6,200 and will receive $191.07 for 40 months. If I punched the right buttons, that’s a 95% yield. After 40 months, we will have collected $7,642. And also, it will only take 12 payments to recover the $2,291 we have left in the note. As you can see, this little deal provides very high yield, with minimum risk and was done in a very short time.
Note. If you don’t know how to use a financial calculator, or understand how to punch the numbers to get these figures, then I recommend my book Taking The Mystery Out Of Money. It has a chapter explaining in complete detail on using a financial calculator for most any financial transaction.

Now, let me explain what I’ve really done with just a few hours of work. Some people will think I simply put a little deal together and made a good profit…which I have. But I’ve done much more than that. What some people fail to realize is that I’ve spent a few hours of work to create a note that now obligates somebody to send me a check every month for the next 40 months. Once the deal is done, what more do I have to do to get paid? Nothing but wait for the mail carrier to bring the checks. I don’t even have to leave the house to get paid, but that nice couple living in that mobile home have to go to work every day so they can send me a check. And they get to do it 40 times. And it was done on an old, ugly mobile home that most investors wouldn’t consider of any value or collateral.

After explaining all this to Fred, I asked him to take another look at that mobile home and tell me what he saw. What he saw the first time was something that looked ugly, but now, he realized he had been suffering from an optical illusion. You might say that Fred’s vision had shown a remarkable improvement in a very short time. Now he could clearly see money. I then asked Fred to figure out how many little mobile home payments like this he would need each month to equal the checks he got from his job. I explained that if he did just one little deal a month, it wouldn’t take that many months before somebody else would be sending him more money than his full time job was paying. And if he still enjoyed working a “job” when he reached that point, he could just keep the job as a hobby.

Now, I’d like to elaborate some more on this little deal to show how a little education and knowledge can make such a big difference in a person’s life. Before I learned how to put my money to work, I was doing all the work. I was so uneducated back then that I thought the answer to financial freedom was working two jobs. And that’s what I did for many years. Finally, I realized there wasn’t enough hours in a day, and I couldn’t work enough hours in a month, to reach financial security. There had to be a better way, and I started looking for that way. When I realized that education and knowledge was the answer, I made up my mind to get an education. You see, until then all I had was some “schooling”. Now I realized I needed some education.

So I started learning who the people were that was successful and was doing what I wanted to do. I started attending seminars taught by those people. I paid money that I couldn’t afford to pay to go to those seminars. I took time off from work that I couldn’t afford to take. I bought books, tapes and courses that I couldn’t afford. I spent many hours listening to those tapes and reading the books, when I could have been watching ball games on TV, or fishing, like a lot of folks were doing. I was doing all the things I couldn’t afford to do, so that someday I would be able to afford to do all the things I wanted to do. And I soon learned that it wasn’t a question of whether I could afford to attend seminars, I realized that I couldn’t afford not to go.

Now I can look back and see that I didn’t do all the easy things, and all the fun things like many people were doing, but I did all the right things. And today, we enjoy financial security and financial freedom and can do what we want to do, and we can do it when we want to do it. While some of our friends are still working “jobs” searching for financial security that they will never know. They had the same chance to make choices that I had…they just made the wrong choices. They all had “schooling” but they didn’t have the necessary education that provides financial freedom. Now they tell me how lucky I are.

The best investment you can make is in yourself. So be willing to pay for your education now, or be prepared to pay a much bigger price for your lack of education later. The choices you make today will determine your financial future. Be sure you make the right choice, because you will have to live with the results of that choice.

Fred paid for lunch that day, which was a burger and fries. (I think I’m working too cheap.) Next time Fred it’s going to be prime rib and good wine.

Update: Fred doesn’t have a “job” anymore. He’s now done over 50 “Lonnie Deals” and is a co-owner in a mobile home park. How sweet it is, Fred. Congratulations.

To your success,
Lonnie Scruggs

What’s Wrong With Our Schools?

It seems that our school system teaches everything except how to go out into the real world and survive. How many high school graduates do you know that can balance a check-book, or understands anything about money and financing? Some of them can’t do simple things like making change unless the cash register rings up the correct amount that’s due. If a burger joint looses power, some of the clerks can’t make change for a $20.00 bill.

If you ask some of our younger (and older) generation if they understand the time value of money and compounding of interest, all you will get is a blank stare. But many of these same people are experts at some idiotic computer game. They’ve spent many, many hours learning how to play games, but no time learning how to make money or how to be financially secure. I read an article stating that the average student spends 15,000 hours going to school before they graduate, but they spend 19,000 hours watching TV during that same period. And you have to wonder just what they did with the 15,000 hours in school, seeing that some of them can hardly read or write when they graduate.

I got a call one time from such a man wanting information on a mobile home I had for sale. This man had a wife and a small child and were living with friends. They were trying to find a place of their own, but would need financing in order to buy anything. When I asked him how much he would be able to pay down on the mobile home, his answer was, “ I don’t have much of anything right now, I just bought a new car and my payments are $400 month”. This man has a family and no place to live, and buys a new car with $400 monthly payments! Talk about having your priorities in order. It was all I could do to keep from telling that man what I was thinking. But I kept quiet and told him I wouldn’t be able to offer him any help. What do you say to a man who thinks like this man? What do you say to a man who thinks a new car is more important than a place for his family to live? What did this man learn during those 15,000 hours he spent in school? Couldn’t have been much, but he graduated. But I’ll bet he can whiz right through some dumb computer game.

I felt both anger and sadness. And I couldn’t help but think about this man and his family and the life they were destined to live. I wonder what his financial position would be if the schools had taught him something about, money, investing, and financing. I’ve done some “supposing” to see just how much better off he would be if he had acquired the knowledge and had the financial discipline that’s required to be successful.

Suppose some of those 15,000 hours he spent in school had been used to teach this man about money, financing, and compounding of interest. What could he have done with his $400 monthly payments that would be much, much better than spending it on a car that’s depreciating faster than he can make the payments? Let’s play with some numbers and see what might have happened with a little education and knowledge.

Let’s suppose the car this man bought cost $20,000 and he either traded or paid $2,000 down, leaving $18,000 to be financed. If the payments are $400 month and the finance company charged 12% interest, it would take 60 months to pay the loan off. If he makes all the payments, he will pay $24,000, and have a car that is worth very little at the end of those 60 months. But if he’s like many people, he will trade that car long before it’s paid for and start all over with a new one. That car will keep him broke and he probably won’t even understand why he’s always broke. And those computer games didn’t teach him anything about how expensive cars really are.

But let’s suppose instead of buying a new $20,000 car, he bought a nice used $10,000 car, and either traded or paid the same $2,000 down and financed $8,000. If he could get financing for this car for 60 months, 12% interest, his payments would be $178. At the end of 60 months he will have paid $10,680 for a nice used car, instead of $24,000 for that new car, a difference of $13,320.

Now let’s suppose he had the proper education, knowledge, and disciple and knew how to invest the difference ($222) each month in something that earns 12% interest, instead of paying it on a depreciating car. Let’s see what his financial position would be in 60 months? If he could invest $222 each month and make it earn 12% interest, he would have $18,130 at the end of 60 months. And if he was really smart and left that $18,130 invested for another 60 months, he would have $32,937. But because the schools didn’t teach him how to do that, he winds up with a worn out car every 60 months instead of financial security. Let’s go even further and see how he could build up financial security and not have to depend on social security (if it’s even around), or a small retirement check from working a job when he reaches retirement age. Suppose at the end of 5 years this man will be 30 years old and he will have $18,130,. If he just left that $18,130 invested at 12% until he was 65 (35 years), that $18,130 will compound to $1,184,000. And if he learned how to make the same $18,130 earn 15%, just 3% more, he would wind up at age 65 with $3,344,000. The power of compounding has been called the 8th wonder of the world, and the schools teach their students very little, if anything about it.

Why don’t the schools teach their students this sort of thing? Why don’t they teach students how to make money, how to save and invest part of their earnings, and how to build financial security? Could it be that maybe the teachers don’t know and never learned about it either? Whatever the reason, 95% of the people reach retirement age and can’t afford to retire. And most will need help from someone to pay the bills. If the schools had only taught this young man how driving a used car for 5 years, and how investing money on a regular basis, and how the power of compounding will make you financially secure in your old age, maybe there wouldn’t be so many old folks that need financial help from someone in order to live a decent life when they are no longer able to work. But like this man, many will still be making car payments, still be broke, and still won’t understand why life is so tough. What’s wrong with our schools?

To your retirement,
Lonnie Scruggs

Find The Need- Fill The Need-FINANCE-The Need

How could I create or "make" notes that would provide high yield with low risk, and with a small investment? That was a question I had been asking myself for some time. After many years in the rental business, I had become a burned-out landlord. I woke up one morning and discovered that I had enjoyed all the tenants I could stand. And I thought how nice it would be, if I could somehow create monthly checks, with no tenants, no management and no maintenance?

So, I started learning about the note business, and began buying discounted notes and mortgages. But finding the kind of notes that met my requirements was not easy. Then I thought “If I can't find notes to buy, there must be a way to create, or "make" my own.” But how, and what vehicle could I use to create notes?”

The answer was right under my nose in the "Mobile Homes For Sale" column of my local paper. After seeing this column for several weeks, it finally hit me that no one was offering to finance the sale of the used mobile homes, only the new homes. Bingo—the light bulb came on and I found the answer...used mobile homes. I decided to run a test ad and see what happened. The response to that ad was unbelievable. Without realizing it, I had opened the door to an untapped gold mine--buying, selling and financing used mobile homes. I had discovered how to create a "mobile home money machine".

There are many ways to make money with mobile homes, but in my opinion, and based on the many years in this business, the best money makers are the older used homes. The one’s I deal in are usually 10-20 years old, single-wide and on someone else's lot. My favorite deal is one that can I buy for $2,000-$3,000 and sell for $4,000-$6,000. My minimum guideline is to sell for at least double what my cost is. I get a reasonable down payment from my buyer, usually at least 10%, and take a note for the balance. And, the term of my notes are usually not more than 36 months. This is my typical deal and what many people now refer to as a “Lonnie deal.” As you will see in my example below, these type of notes provide extremely high yields, with very low risk, and with a small amount of cash invested. Let me share one of my actual deals with you.

The owners of this mobile home were moving out of town and needed to sell. They had been trying for some time to get $5,500 (which was a good fair market price) for the home, but with no luck. Several people wanted to buy the home, but didn't have $5,500 and couldn't get a loan (So, what else is new)? With just a few days left before this couple had to move, they had now become "motivated sellers."

I negotiated to buy their home for $2,500 cash and solve their problem. The reason I was able to buy for that price, is because that was the best cash offer they were able to get, and they had to sell. I paid $250 lot rent that was due, and $72 in advertising cost. My total cost in the home was $2,822. It was sold 10 days later for $5,950, $750 down and a note for $5,200, payable 12.75% interest, $203.33 per month for 30 months. I now had $2,072 in a $5,200 note, so what's my yield? According to my calculator, that’s 109%! No, that's not a misprint--109%.

After 30 months I will have received $6,099, plus $750 down payment for a total of $6,849. Subtract my total cost of $2,822 leaves a profit of $4,027. And it only took a few hours of my time, plus the knowledge, to obligate someone to send me a check each month for 30 months.

As you can see from this actual example, I was able to create, or “make” a high yield note in a short time, that provided me with a monthly check for 30 months. Once the deal was done, what more did I have to do to get paid? Nothing but wait for the mail carrier and cash the check. I could stay home or go fishing, but the checks were still due every month. This is an excellent example of making your money work for you, instead of you working for your money.

Now, I’ll bet you're asking, or at least thinking, "What if they don't pay"? Well, let’s see what might happen. Once my buyer makes 10-11 payments, I have all my money back. If they had stopped paying and moved out, wouldn't I have had a free mobile home to resell? Could I find a new buyer, get another down payment and create another note? In all probability, I would be in a better position with a new buyer, than I would had the first buyer continued paying? If my first buyer’s make all the payments, I make a good profit. If they don’t pay me and Iget the home back, I sell it again and make a better profit. So I’m in a good position regardless of what happens.

Also, by selling instead of renting, I don’t get trouble calls like I did when I was renting houses and apartments. If the roof leaks, the water lines freeze, or the furnace dies, the buyer’s get to fix the problem. I’m just the lien holder, and lien holders don’t fix problems. Lien holders just collect monthly payments. The note business is a great business. It sure beats working a "job". Try it…I bet you’ll like it, too.

Happy Investing,
Lonnie Scruggs