Buyers market+high lot rent, advice on deals?

Question

Hey everyone,

I'm in the process of working on my first deal and I've run into a couple obstacles.

I'm looking for homes in the $2000-5000 range in a market that has lot rents from $400-550.

I tested the market for buyers and got very few responses (2 in 1 week by email). I did the same test in a much smaller market and for 4 responses in 1 week. I asked a mobile home park manager the approximate time a home is on the market and he said 3-4 months is typical.

Doing a deal in this market seems pretty risky to me. I can only see a deal being worthwhile if I buy from an extremely motivated seller.

Does anyone have any advice for this situation?

Rachel H. · Answer

In my experience, the neighborhood and your comfortability level is key to being successful in this business. I've dealt in areas that have gone against my comfort level due to lower priced homes (as well as lot rent) and it's only ended in disaster. What I found is that I have to match my personality with the types of folks and areas I feel comfortable working in. Otherwise, it can be detrimental. Hope that helps!

Tyler McKendry · Answer

Paul, I would like to find a motivated seller and buy in cash, then sell on financing. Hey John, I'm glad you responded. I'm trying to sell on financing, and I did include this in my test ads. The test ads were listed online-- I suppose a sign out front and/or near by intersections would be would be an effective selling strategy, too. Tampa does seem like a great market for MH investing. Everything from my initial research indicated it was a great market. At this moment I am quite discouraged. The last 2 leads I had turned out to be people posing as motivated sellers that were actually flippers trying to sell a home they fixed-up. Another lead I had was a guy who was completely delusional about this homes value and not motivated enough to need to sell. I'm sure these things are common. If this was really easy, everyone would be doing it. I'm glad to hear the homes can be sold in <1mo with effective advertising and pricing. This is the first time I've heard this, but, I'm positive you know this market better than the other people I've asked. I will drive through some more parks tomorrow and talk with people looking for leads.

John Fedro · Answer

Hi Tyler, Glad that you are jumping into mobile home investing. I began my career in Tampa Fl and continue to invest there so I know that this is a good market to be starting in. In fact most areas of the country are great if you know what you are doing when getting started. I have to say that in your posting you really used logic to convince yourself that MH investing may not be the way to go, however the opposite is true here when investing correctly. Let's take your posting piece by piece. Your original text is in italics. I'm in the process of working on my first deal and I've run into a couple obstacles. This is common to hit obstacles, especially when starting and learning solo. Obstacles make you money and keep other investors away. I'm looking for homes in the $2000-5000 range in a market that has lot rents from $400-550. This is standard lot rent in this area. I tested the market for buyers and got very few responses (2 in 1 week by email). I did the same test in a much smaller market and for 4 responses in 1 week. I asked a mobile home park manager the approximate time a home is on the market and he said 3-4 months is typical. You are not testing with the correct verbiage, prices, terms, and/or marketing-medium to be only finding this few buyers or tenant-buyers, even going into the slower winter months. Are you only selling your "future" homes all-cash? If you are selling only for cash then you are competing against every other mobile home seller selling for cash. Also, in my opinion don't let buyers email you. If they are serious they can call you. Lastly, it should take less than 2 weeks to resell your mobile homes if you price them right, up to one month if you need to re-work the numbers and remarket to new tenant-buyers. Doing a deal in this market seems pretty risky to me. I can only see a deal being worthwhile if I buy from an extremely motivated seller. If you are only able to make money by purchasing mobile homes from super-highly motivated sellers that are pulling-their-hair-out then you will not be in business for long or not full-time at least with MHs. I say this to encourage you to learn/train how to target more sellers, more owners, and create win-win solutions to give sellers more money for their homes while also making the home really valuable to your future buyers too. We really just scratched the surface but I hope this all makes sense? If not, or if I brought up more questions simply let me know. Talk soon, John Fedro

Paul Tschetter · Answer

My initial thought is that I love that you are testing out the market, talking to people, ect. before just jumping in and buying something! One question I have is, what exactly is your strategy; what are you trying to accomplish with your first deal?