Am I looking at this right?

Question

Hello everyone, first post here, and I have been lurking for a couple weeks just taking in as much information as possible. Now while I've been looking at info here I've been browsing online at MH to either flip or lease to own. I've found a few, one particularly has sparked my interest, it's only $6000, but the "zestimate", which I've read to take with a grain of salt, says that it's around $103k. Even if it's off by 10 or 20 grand, that's still pretty good right? Furthermore, looking at the neighborhood home values they're ranging from the low 60k to 100k. I'm getting this gut feeling that if the MH checked out that this a great way to get started in RE investing.

Please let me know what you think. I'm very eager to hear what you have to say! Help me Obi-wan Kenobis, your all my only hope!

Please let me know what you think. I'm very eager to hear what you have to say! Help me Obi-wan Kenobis, your all my only hope!

John Fedro · Answer

Hi all,

Welcome to the investing world Nicholas and welcome to BP. Great advice everyone. I would be happy to add my experience to give a little more insight to the specific area of southern Ca and the Yucca Valley that you are investing in (if the property is located in the local area). Once you head inland from the coast you will start to see asking prices of mobile homes in parks prices drop from $70k+ average to $30k+ on average. In addition to a drop in price when you move inland (as you are) you will find more homes for sale, more time on the market, and less cash buyers competing with you. So, with that said I have no doubt that in this area there are 'some' homes going for $60+ however these are not likely the average. If you found a mobile home where the seller is asking $6,000 then it is likely you can do a little better than this price. I say this because if it where really valued at $60k it would already be sold.

Instead I am more inclined to think this home is worth what someone will pay for it. An end user that has cash may pay $10k or more eventually, however the market has spoken and the home is still for sale at $6k. Now, an end user that does not have all cash to buy the home will pay you 60+ months of market rent (including lot rent) to own this home at the end of the term. Watch out for you paperwork here as it is easy to violate the Dodd frank or Safe act if not careful.

Go see the home, find out why the seller is selling, talk with the park manager and make sure you are ok to be there (this is an important talk - be humble and let the PM know you will be reselling and not renting/sub-letting), and post the pictures here on BP or email me personally for more info or advice to move forward. You may have a deal there or you may not. You may have a motivated seller there or you may not.

I hope this vague answer helps you move forward. However we will not know the answer to whether this is a "deal" or not until the home is checked out, the size and condition is checked out, the park is checked out, you make sure there are buyers available (which in So Cal there are many), and the park is happy with you being there.

Should you need anything else don't hesitate to ask.

Thanks for the shout out Brian.

All the best,

John Fedro

Tom Keith · Answer

@Nicholas Kirsch @Rachel  H. I agree with Rachel, you cannot rely on Zestimate unless all features are the same. That is a compilation of computer knowledge. Not boots on the ground.  But don't give up on it do you due diligence and go after it. Tom

Brian Ortins · Answer

Keep in mind that financing for MH is difficult or non existent with banks. It seems that most investors hold the note on MHs.  I have never heard of auctioning a MH to get a higher price, as I do not know if there is a high demand or lots of cash buyers. These are my opinions as I do not specialize in MH investing. Maybe @John Fedro can chime in.

Nicholas Kirsch · Answer

Okay, that's what I thought. I did figure that in purchasing this MH that it would still require a monthly payment to the park.

Now I can't go over to look at this place for a little while due to work, but say, lets just play along for a moment, that I check this out and its in decent condition, and just needs a little cleaning and a little beautifying. Would it be better to try and flip it, say an auction or better off doing a lease to own? I feel that the lease to own may seem easier to people looking for a place instead of someone just shelling out cash.

Jared Rogers · Answer

@Nicholas Kirsch what @Bill Jacobsen was saying that he believes that the price of $6,000 is for the mobile home only not the home and land.

Nicholas Kirsch · Answer

@Bill Jacobsen, what do you mean that it sounds like a home and not the land?

Bill Jacobsen · Answer

First, I don't think Zillow differentiates between manufactured homes and stick built homes.  I use Zillow to find comparables.

Lots run $30,000 to $60,000 in my area so a price of $6,000 sounds like a home to me and not the land.

Good Luck.

Bill

Brant Richardson · Answer

Check out podcast #75 if you have not already, there's a lot of good mobile home info.

Rachel H. · Answer

Nice to hear your interest in this niche!

Regarding your question, the values of mobile homes will vary from neighborhood to neighborhood. If you're looking in parks, the values could be different for each one depending on what has sold there. If you're looking on land, it's the same story.

When comparing homes, you'll need to make sure they are comparable (i.e. singlewide or doublewide, number of bedrooms and bathrooms, materials, etc.). One home may not be comparable to another and vice versa.

From personal experience, I find park managers/owners and mobile home dealerships to be a good source of information when assessing values.

Hope that helps!

Am I looking at this right?

Most Popular Reply