will these numbers work

Question

i came across a deal and I would like to run the numbers by everyone to get their opinion since this would b my first deal and I have no experience. Here's the deal:

2006 14x65 2br/1b

Currently occupied with a renter of a year @ 450/m rent with 150/m lot rent. The lot rent is paid from the 450. He wants 8500 cash or will owner finance with 2k down and 300/m for 24 months. I think I can come up with the down payment and I'm ok with the terms, but my rent income would go 100% to my note. I just don't know if I should stay away or go for it because as long as it stays rented it will pay for itself eventually.

He also has a 14x65 3/1.5 with a 5 yr renter @ 300/m minus 124/m lot rent for 6500. I would like both but it would be a couple years before I saw a positive dollar.

I'm trying to sell some man toys to get the 2k and I feel confident I can scrape it up. I could also take the 2k and pay off a current 401k loan and then I could borrow 8k.

Any tactics from the experienced? I've been reading these success stories and I'm anxious to dive in!

Daniel Warren · Answer

@Eric F. Thanks for the advice....I wouldn't mind holding the note if I can get a lower cash price, especially on the one where the tenant has been there for 3 years, but are you guys still doing seller finance? I found this site after reading lonnies books and doing lonnie deals was what I had in mind for a game plan

Eric F. · Answer

I wouldn't do either of those for those figures unless I could sell them for more either cash or holding the note the day the renter left.  I just bought a 3 bed/2bath for 8k which I could sell holding the note for much more tomorrow.  It is currently rented with a difference of $425 between lot rent and the note.  It is a nice home.

If you bring cash and lay it in front of them you could probably get the prices down a lot.  The one I got for 8k cash (9k agreed price but tenant deposit I assumed liability and he gave me a 200 credit to power wash it).  He started off insisting it was 12k or bust and I told him I had cash and we could do this thing in 24 hours, but 8k is all I will bring.

From what I have learned and experienced first hand, cash is king in this business.  The mobile home end buyer cannot come up with hard cash.  You can get massive discounts by bringing those Benjamins to the table.  Post some ads trying to sell your home and you will quickly understand buyers flush with cash are almost non existant.

Daniel Warren · Answer

Great advice guys, thanks! I think for now my plan of attack would be to try and tap into my 401k for the 8k, and offer him 8k for both and see how that goes

Collin Goodwin · Answer

I agree with Casey. I would make a cash offer for a much lower figure. If he is not willing to budge, hold out, in a month or two your offer may look much better than any others he is getting. Keep in mind it is a 2/1, not always the most marketable set-up and you dont want be left with the burden. Dont buy just because you can.  Now I will say for a newer mobile home, its not a terrible price depending on the make and quality.

Daniel Warren · Answer

thanks @Casey Kleinhenz I will consider that. He might deal well for both. His ad said he needed the money, and when I asked, he said he had another project lined up he needed cash for. Said those were the only two mh's he owned that weren't on his land so he thought he would sell them for the cash

Casey Kleinhenz · Answer

If you get your cash, then try a lowball cash offer on the 3BR. He's only making $175/mo and is still responsible for all maintenance expenses. It's almost a liability in his current deal. He might let it go 1/2 price or more.

Don't go all in right away. You'll want cash for the next great deal you find, and 2 BRs don't sell as well anyway.

Daniel Warren · Answer

thanks @Casey Kleinhenz I would be afraid that if my note took up my whole rent money, with my luck everything would break all at once. What I was thinking is that if I can get that 8k from my 401, then I could buy the 6500 one and put the 2k down on the other one with the note. That would at least give me the note paid and 175 clear every month.

Rent to own is what I prefer to do, and how I landes on bp. I have all of lonnies books, but after reading everything on here it seems the Lonnie deal is dead due to safe act/Dodd frank. But that's actually what I would prefer to do thougv

Casey Kleinhenz · Answer

I've done a couple mobile homes in Fayetteville. Hold out for a deal where you can just pay cash. Be patient. It will come up. There is too much that can go wrong with renting a mobile home to worry about a payment.

My best deal was acquisition cost = 6 mos rent (payment to you, not including lot rent), a less good deal was acquisition cost = 18 mos rent.

I highly recommend rent-to-own for a three or four year period. It gets me out of a lot of maintenance expenses. Do you really want to own that home in four years anyway?