The SAFE Act: Don’t Quit Before You Even Get Started

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Disclaimer:  I’m not a financial or legal professional so everything you are about to read is simply one investor’s opinion.

For those who don’t know anything about the SAFE Act:

  • Quick info on SAFE Act:  Under the act, it has become illegal to seller finance a residential property to a retail buyer.

There are a lot of people throughout the online and offline space who know way more about the SAFE Act than I do.  I don’t want to talk about the specifics of the act but instead the fear that this has instilled in new investors.

First, let me back up and talk about my introduction into real estate investing.

My Story

I got inspired to begin investing in real estate after reading Lonnie Scruggs’ books about mobile home investing.  For those who don’t know, he built his business on buying cheap mobile homes and selling them on terms.

However, once I began to search the real estate forums on several websites, the SAFE Act kept popping up.  I spent several weeks researching the act as well as getting my mobile home license to buy and sell mobile homes with my state.  Honestly, with so many scattered viewpoints and having a difficult time between establishing what was fact and what was fiction, I felt lost.

Eventually, I just decided to get started.  I guess the potential returns were too good to turn down.

My first deal was a mobile home that I seller financed to a retail customer and continue to collect money on.  I realized that I didn’t feel comfortable not owning the land as well so all of our investments since then have involved mobile homes with the land.

So, the mobile home licensing issue went away (since we own the land as well as the mobile home).

Get Started and See If You Like It

My advice to new investors is to get started in the niche that they are interested in and figure out these licensing issues once they have completed a few successful deals.  As it turns out, I didn’t need to complete the mobile home licensing but wouldn’t have known this if I hadn’t gotten started.

You may start out thinking you want to seller finance some single family homes for the fairly passive income but later decide that you would rather rent the homes to keep the appreciation.  Suddenly, the SAFE Act no longer applies to you.

So What Do I Do If The SAFE Act Does Apply To My Business?

I don’t think anybody really knows what the penalties will be or how the government will enforce this act on small investors.

You may want to contact your state housing association and assess their thoughts on the SAFE Act and how it might apply to your business.

You might also want to look through real estate investing forums relating to the SAFE Act,  especially the posts that link to more official news of this act and not so much the opinions of any one investor.


Here is my rationale:

The product that seller-financiers and rent-to-own sellers are delivering is not illegal.  After all, we are not drug dealers but are simply providing housing and giving renters a chance to become homeowners.

And financing for housing does not appear to be ending anytime soon (look at the huge bank bailout made by the federal government just a few years ago.)

What has been called in to question is the legality of the method of delivery.

So we are going to need to change our specific strategies, but the basic business model should remain the same.  Many low income families are still going to want to own their own home but will get turned down by banks for financing.  The need for the investor who is willing to fill this void will always be present.

My belief is that as more information comes out about the status and enforcement of these federal regulations, the investors who collaborate on and other locations will discover solutions and adapt their businesses to these changes to remain profitable while staying on the right side of the law.


I know that I am going to take some heat for this.  What’s your opinion in regards to the SAFE Act?

About Aaron Kinney

Aaron Kinney (Facebook) has been investing in mobile homes with land with his dad since 2011. He has begun sharing his business in the MobileHomeEbook Blog and has even written a book that outlines his strategies.

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