Sucess stories - mobile homes with land

[Zack Presnell]

Hi BP members. Is anyone actively purchasing mobile homes with land and renting them out? What is your criteria for purchasing? Thanks.

[Curt Smith]

Tnx Jackson for hooking me in.   

My wife and I spent today (and tomorrow and a few more) at a 1998 double wide on it's own land in Locust Grove GA.  We have 2 being rehabed and a 3rd in queue to close in Locust Grove GA in a week.  This year we'll have done 10 double wides into our rent to own portfolio.  We bought this one for $18k, but it was in rough shape.  Much worse than ALL of our other 19 double wides and will take $20k rehab for just under $40k all in.  Our typical all in is $35k for 1998-2004 on .5 acre to 2.5 acre here in North half of GA, from Macon on North.  

I marketed on Craigslist and postlets.com for a rent to own, wrecked credit ok, $875/mo rent, $1500 down, rent for 12 months, another $1500 and we'll finance you into a mortgage for around 14 yrs.  Selling price $80k financed $77k at 15yr, 9.5% interest $3k down and Dodd Frank compliant (another forum and zillions of threads).

A nice family gave us $875 in a money order for a reservation fee last week.  Now we have to finish the house.  This ALWAYS happens.  We never have an empty finished house being marketed.  I put ads up the day we close and show it all through the 3-5 week rehab and take reservation cash before it's done 98% of the time.  We have found that showing a rough shape house scares away the folks we don't want anyway.  If they survive the rough shape showings and are willing to put down reservation $$ they have proven themselves to be "determined to succeed" no mater what.  I'm happy to have folks no show, tell me they house looks like crap, stick their noses up, even ask "what color am I going to stain the deck".   OMG if they care about what color they are NOT my kind of rent-to-owner!!     I just don't have problems with fussy or PIA renters!   I have other interview techniques for ferreting out PIAs.

I've determined:  The number 1 indicator of a candidate to being a long term success, is if they have a bank account with more than $3k in it.  90% of applicants don;t even have the move in 2 x rent in hand.  Honest, folks call wanting me to show the house to them and they don't even have $500 to their name let alone 2 x $875.  

Landlords: you will be faced with renters begging to be put into your "baby" just all fixed up.  They will beg to pay the move in costs "over time".  The answer is NO, wait till you find someone with a bank account AND savings.

I do occasionally have a family 'failure".  A break up, a lost job etc etc.  Everyone in blue-colarville is one problem away from serious problems like missing the rent payment etc.  Add in drugs and alcohol and even my model will see problems now and then.  Straight rent, you'll see drugs and alcohol and job loss ALL THE TIME.   (screening a rental neighborhood) spend a few minutes poking through the neighbors garbage.  Notice how many humungous bags of beer cans there are.  :)

The above numbers we double our all in cost for the selling price, take $3k down, and finance at 9.5%, using a licensed mortgage loan originator, qualifying to 43% DTI or better and few other Dodd Frank steps. Cap rate runs around 30% +/-.

We agree that we'd NEVER rent a mobile home.  But when you market to "move up" families (dual income middle aged with GOOD jobs) you'll have a great business model with rent to own, with seller financing.  I rarely have turn over.  Which is the main issue with any rental business.