A Lonnie deal is a mobile home investor buying a used home cheap, then seller-financing it to an end buyer on a 36–60 month note. Done right, it turns $7K of capital into $200–$400/month of cash flow for years. Done wrong, it turns into a repo, a vacancy, or a Dodd-Frank complaint. Here is the playbook that actually works in 2026.
- Typical Lonnie deal: buy for $6K–$10K, sell for $18K–$28K on a 36–60 month note
- Annualized returns of 40–80% are common on clean underwriting
- Dodd-Frank licensing and SAFE Act compliance are the biggest operator risks in 2026
- The right exit buyer is the deal — screen harder than the seller
Lonnie Scruggs popularized the strategy in the 1990s, and it has been a quiet mobile-home-investor cash-flow machine ever since. The core move is simple: buy a used mobile home at wholesale, resell it on a seller-financed note at retail, collect monthly payments for 3–5 years. The math works because mobile home buyers are bank-rejected, desperate for a home, and willing to pay above-market interest rates to get one.
The math on a typical Lonnie deal
A 2005 single-wide bought for $7,500 and resold at $22,000 on a 48-month note at 12% interest. Monthly payment: ~$578. Total payments: ~$27,750. Capital out: $7,500. Return over 4 years: $20,250. Annualized IRR (roughly): ~55%.
- Typical purchase: $6K–$10K (distressed single-wide chattel)
- Typical resale: $18K–$28K on 36–60 month note
- Typical down payment: $1K–$3K
- Typical interest rate: 9%–12.99% (state max caps apply)
- Typical monthly cash flow: $200–$400 per deal
Five deals active produces $1,000–$2,000/month of passive payments on $30K–$50K of capital. Twenty deals active produces enough cash flow that most operators stop driving to deals.
Where Lonnie deals die
1. Bad buyer screening
The #1 reason Lonnie deals fail is the buyer, not the home. If your buyer loses their job in month 4 and stops paying, you are looking at a repo. Screen like a bank would: verify employment (pay stubs or direct employer call), verify income (3x the payment minimum), and pull a credit report. A 580 credit score is fine; no verifiable income is not.
2. Dodd-Frank SAFE Act non-compliance
Selling owner-financed homes to consumers is regulated federally. Most mobile home investors are exempt from full SAFE Act licensing under the "three or fewer notes per year" carve-out, but the rules get complicated fast past that threshold. State-level rules vary. At 4+ notes per year, most investors hire a licensed Residential Mortgage Loan Originator (RMLO) to prepare the note and disclosures.
3. Park approval mismatches
Your note buyer still has to pass park tenant approval. If the park requires 650+ credit and your buyer is 580, you have a deal that dies on approval day. Always confirm park approval criteria before you take a deposit.
4. Under-collateralized paper
If your buyer stops paying, your collateral is the home. The home only has value if you can repossess, clean it up, and resell. Homes in tough parks or with title defects are harder to repo cleanly. Weight buyer screening accordingly.
The structure that works
- Buy right. Your max offer on a Lonnie acquisition should be 30–40% of the anticipated resale note value. $22K resale target = $6.5K–$8.8K max offer. Tighter spread than SFR flips, but you get 36–60 months of income instead of a one-time gain.
- Small rehab. Spend $1K–$3K to make the home presentable. End buyers are not investors — they want a clean, livable home, not a trophy.
- Price the note fairly. In markets where the end buyer could rent a similar home for $900, do not price the note payment at $1,400 — you will get chronic late pays. $750–$900 monthly payment works for most markets.
- Require 5–10% down in cash. Buyers with skin in the game default less. $1,500–$3,000 down on a $22K sale is the sweet spot.
- Run payments through a licensed servicer. Companies like NOTE Servicing Center or Madison Management handle escrow, insurance verification, and late fees. Costs $10–$25/month per note. Worth it.
Lonnie vs cash flip — which fits you?
- Cash flip: $3K–$8K profit in 30 days. Fast capital rotation. See Chattel Playbook.
- Lonnie deal: $10K–$25K profit over 36–60 months, plus ongoing cash flow. Slower capital rotation but higher lifetime return.
Most mature mobile home investors run both — flip for cash flow to fund operations, Lonnie to build a long-tail note portfolio that funds retirement.
Lonnie deals are the best passive-income strategy in mobile home investing — if you screen buyers like a bank and stay on the right side of Dodd-Frank. Sloppy buyer screening is what turns a 55% IRR deal into a 3-month repo headache.
For sourcing the chattel homes that become Lonnie inventory, see How to Find Motivated Mobile Home Sellers and Direct Mail to Mobile Home Owners.
Frequently Asked Questions
What is a Lonnie deal in mobile home investing?
A Lonnie deal is buying a used mobile home at wholesale ($6K–$10K) and reselling it on a 36–60 month seller-financed note at retail ($18K–$28K). The investor collects monthly payments at 9–12.99% interest for the note term, producing 40–80% annualized returns on $5K–$15K of invested capital per deal.
How much money do you need to start Lonnie deals?
$5K–$15K per deal. A typical first deal: $7,500 purchase + $2,000 rehab = $9,500 capital. You recover most of that at sale (down payment + first few months of note payments), and the remaining capital is recouped over months 4–12 of the note term.
Are Lonnie deals legal under Dodd-Frank and the SAFE Act?
Yes, with compliance. Most investors are exempt from full SAFE Act licensing under the federal "three or fewer notes per year" carve-out. Above that threshold, most investors hire a licensed Residential Mortgage Loan Originator (RMLO) to prepare the note and disclosures. State-level mortgage licensing rules vary and should be reviewed with counsel.
How do you screen buyers for a Lonnie deal?
Verify employment (pay stubs or direct employer call), income (3x monthly payment minimum), and pull a credit report. A 580 credit score is acceptable; no verifiable income is not. Require 5–10% down in cash. Confirm the buyer will pass park tenant approval before taking a deposit.
What happens if a Lonnie buyer stops paying?
The note goes into default, and the investor repossesses the home. In most states this is faster than SFR foreclosure (often 30–90 days). The home is then cleaned, repaired, and resold on a new Lonnie note — typically producing another cycle of returns. Default rates on well-screened Lonnie deals run 8–15% over the life of the note.
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