Powering Profits with Private MH Paper

As professional investors, all of us dream of the opportunity to buy good investments - earning great yields... and with satisfactory risk/reward ratios!!!

But most of us aren't aware that for the past 10 years, a relatively small group of prescient private investors (including yours truly) scattered around the U.S. are happily digesting well-secured 13% to 40% average yields. Some of the more knowledgeable of these investors are occasionally doing even better... earning returns of as much as 70%, or more, on their investments!

How are these clever folks achieving this remarkable ROI? By carefully and intelligently investing in privately held "seller carryback purchase money notes"! Does the idea of having a crack at 43,000 or more notes each year, notes that are earning investors anywhere from 13% to 70% and higher (and that hardly anyone else is looking for) appeal to you?!? If so, read on!

The Hidden Market

You might already be aware of privately held seller-carryback real estate notes. What you probably don't know, is that there is a very lucrative little niche in the private paper industry where you can purchase a heaping helping of all the good notes you can handle, without fighting for your place in the bread line. That niche is mobile home paper!

More specifically, these are private seller-financed notes that are secured by used manufactured homes (HUD-Code) located in mobile home parks (or "manufactured home communities" as the MH industry likes to call them these days).

The mobile home note arena is a marketplace that is vastly overlooked - as well as being greatly misperceived by the majority of note investors. But if you decide to fully investigate this remarkable wellspring of peerless profits - you'll come to learn the reality is that most note buyers, simply don't understand the overwhelming advantages of careful investment in private "seller-created" mobile home notes! And most investors haven't even heard of them!

"But it's not real estate!", you say. And... you'd be right! These are not real estate notes either, as the manufactured homes serving as collateral are situated on leased spaces in MH parks - and thus they remain personal property (not permanently affixed to and owned together with land).

From a practical standpoint however, MH notes are negotiable cash flow contracts secured by residences, so they do have a very common bond with both real estate, and real estate paper.

Like real estate notes, the MH collateral securing the notes still exhibits several of the more important characteristics of residential real property. Most manufactured homes situated in parks are principal year-round, single-family dwellings. They have long remaining physical life spans similar to site built structures. They have relatively expensive foundational support, and are also relatively expensive to move out of a park location.

As a result, more often than not, these homes are almost never moved from an original delivery site.

Mobile home paper is bought and sold with very similar analytical procedures, and title transfer protocols, as real estate paper - with only slight variation. Lien perfection, recordation, an orderly foreclosure processes, assignment of interest, insurance coverage, lender in possession, etc. - all run along the same lines as the more traditional real estate notes to some degree... experienced real estate and/or real estate investors should be able to do both kinds of note transactions fairly easily.

The major differences are that there is no land title involved, no land as an additional asset, and chain of title to the home - as well as lien perfection documents - are recorded at the individual states' designated agency, rather than at the county recorder's office.

Oddly enough, what little differences there truly makes for a big difference in the profit structure - averaging more than double the returns available for similar real estate deals. This is due almost entirely to misperceptions about mobile homes as collateral, and failure to understand the simple intricacies in purchasing and managing MH paper investments.

And if underwritten and purchased intelligently, both in pricing and purchase structure... these notes are no riskier than any of the other types of notes you are used to purchasing!

Advantages

What are some of the other advantages of buying MH notes? Perhaps the most prominent are that you have several extra layers of protection for the notes:

• Park management provides a set of constant set of eyes on the property for you every day, at the park owner's cost. This with regard to waste.
• Parks are in business to collect monthly lot rent. This usually results in keeping you more up to date on any defaults - so you can move faster to protect your interests.
• Many smaller notes to work with which allows you to spread your risk over a broader base, and makes them easier to resell to private investors
• Less expense in titling, escrow, recordation, transferring, and repossessing the security.

Now Consider This...

Manufactured homes presently make up 5% of U.S. housing stock. Various industry reports, including recent updates to the seminal 1997 study "The Future of Manufactured Housing" sponsored by Harvard University's Joint Center For Housing Studies, indicate that roughly 900,000 used manufactured homes are being resold every year.

Of these, it is estimated that used manufactured homes located in MH parks make up about 40% of those resale's, totaling 330,000 to 400,000 of the resale mix annually. It is believed that double-section HUD-Code homes which look like site-built homes will account for most low-cost housing in the future. At the same time, the financing pipeline for purchasing used MH units has always been highly fragmented at best - and for most used MH buyers, normal financing channels are almost non-existent!

Consequently, seller-financing is traditionally used to achieve the sale of these used MH units in approximately 50% of the transactions. That offers a renewable source of roughly 165,000 to 200,000 private MH notes coming into the marketplace every year, and a cumulative dollar value of approximately $60 Million to $70 Million in private MH notes outstanding, annually.

Powering Up Your Profits

Although the advantages are overwhelming, notes secured by used mobile homes can be very tricky investments to deal with. Without a good working knowledge of the intricacies and the relationships between the various risk factors involved, most investors will not be able to successfully cross over into this lucrative niche.

The solution is simple - take a serious approach to understanding the mobile home marketplace, and learn the factors necessary for completing mobile home note transactions, including basic risk analysis and risk management techniques for structuring safe note purchases. Fortunately, the things you need to know are relatively easy to learn.

If you are an active "hands-on" investor who wants to turbo-charge your ROI, you owe it to yourself to carefully consider what mobile home notes can do for your investing activities - and participating in David Butler's and Terry Vaughan's Powerful Profits From Private MH Paper Workshop will put you in the driver's seat, teaching you everything you need to know to operate successfully in the mobile home note arena. It is the only course of its kind in the private paper industry.

Then put the principles taught into action. Unlike most note courses, you can start the next day on an equal footing with investors who have been profiting with mobile home paper for years.

Your piggy bank will thank you for it!