New mobile homes investing strategy

Mobile Home Park Investing
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New mobile homes investing strategy

Duriel Taylor
Realtor · FL · Member since 2013 · 372 posts · 83 votes
Hello All, I need all the input as possible. My strategy was to buy duplexes, triplexes, and or fourplexes, then hold them then rent them to tenants. I would buy properties in Miami and broward county. With decent cash flow but it did not give me the "fire my boss" (I still work a 9-5) cash flow. So I start thinking, I do not have the huge funding behind to purchase several at a time; I need a new strategy. Thus I came across mobile home investing. Here in south Florida you see several dozen decent parks. My strategy is as follows: -find a private owner willing to hold the note on a trailer no more than 20k. -I would put down 10% of the 20k then finance the 18k for 5yrs or less. -go into a park that is 650 per month for lot rent -find tenants that will pay 1300-1400 per month, keep them on a month to month. I would have no intention to "get rid"off them but it's added motivation to keep the trailer in its best condition as they live there. -I compensate a relative for getting involved: the relative will borrow me 10k from a lending (online) firm. These payments will be $176 per month for 5 yrs. I will pay that relative $5k for using there credit worthiness in 12 months. -i would 6k out if the 10k on 3 trailers (10% down payment on 20k) -then use the 10k-6k=4K (use the 4k difference to give back immediately to the relative who gave me the personal loan from their credit worthiness loan. -I would duplicate this process 3 times monthly; 3 purchases per month for one full year. So the numbers go as follows: A: 20k (purchase) 2k (Downpayment) 18k. (Finance for 5yr/60 mons) Monthly expenses: -300 owner finance for 5yrs -650 lot rent -55 (2k repayment to the relative for using their 10k credit worthiness; for 12 months) -58 (176 monthly payment from the funding institution) -100 cap x Monthly revenue: -1300 (2nd best case) -1400 (best case) Monthly profits: -137 x 3= 411 -237 x 3= 711 What are your thoughts and or concerns on this strategy? Please be as harsh as possible. Im looking for longevity with this strategy thus I could use the blunt truth. I look forward to hearing from you soon. Thank you in advance. Regards,
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  • Ronald Bourgeois
    Real Estate Agent · Wareham, MA · Member since 2013 · 112 posts · 67 votes
    10y

    @Duriel Taylor

    Are lot rents really $650 per month in that area?

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  • Duriel Taylor
    OP
    Realtor · FL · Member since 2013 · 372 posts · 83 votes
    10y
    Ronald Bourgeois Thank you for your feedback. To answer your question; yes there is a in house broker at a park selling 10 trailers and the lot rent is $650.
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  • Account Closed
    Investor · TX · Member since 2015 · 119 posts · 40 votes
    10y

    @Duriel Taylor I've also experimented with mobile homes. Meaning to buy cash and sell on financing. I found some deals but had a hard time getting a buyer. I know that finding sellers is the easy part but buyers hard. Most places I looked into where 55+ communities that also made it harder to find buyers.

    Since I've been looking for someone who might want to experiment with different techniques. So hit me up I have a few more ideas.

    Also I think your desired rent rates might be a little high at 1300 and 1400, what parks and areas where you looking at ?

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  • John FedroPro Member
    Investor · Austin, TX · Member since 2009 · 413 posts · 295 votes
    10y
    Podcast Guest on Show #75
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  • Duriel Taylor
    OP
    Realtor · FL · Member since 2013 · 372 posts · 83 votes
    10y
    Noe Perrin Thank you for your feedback. I would be honored to network with you. Please send me a PM and we can talk ASAP. I look forward to hearing and working with you soon. Regards,
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  • Rachel H.
    San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    10y

    If you're in FL, be sure to look into hurricane coverage for insurance. This will need to be worked into your numbers. I hear a lot of stories about damage in this part of the country due to hurricanes. You'll have to weigh the pros and cons and see if it's worth it. Good luck! 

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  • Justin Jocewicz
    Investor · Royal Palm Beach, FL · Member since 2013 · 162 posts · 67 votes
    10y

    I think that $1300-$1400 rents for a trailer is astronomically high.  Even for 3BR/2BA double-wides, you should max out at $1,200.  Finding large trailers in decent shape for $20K is going be a challenge.  The real winner in trailers is the person collecting the lot rent.  There is a podcast about trailer park investing.  Unfortunately, I don't know which number it is off the top of my head.  

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  • Duriel Taylor
    OP
    Realtor · FL · Member since 2013 · 372 posts · 83 votes
    10y
    John Fedro Thank you for the prompt feedback.There are some great communities that are in the $700 below range on lot rent here in south florida. To be honest I have not seen many $20k or less mobile for sale. The ones I have seen needs some form of rehab work. In my current financial state; I prefer trailers turnkey. A little paint and cleaning at the worst however, I do understand that the better deals (trailers) may need work. If a seller wants their money within in 24-36 months I am current I could creativity come up with a plan to make that payment but I would much rather pay back within 5 years or less. I figured with tax returns and or other tax breaks I would be able to pay off and or pay down those obligations. My aim is surely to have a cash flow of $400-$300 per month per mobile home. I recently spoke with a mobile owner who I found on craigslist and he mentioned his neighbors were renting there trailer to a tenant for $1300, somewhere in Davie, Fl. The lot rent is $700 and it has all the amenities. When I first considered this investment strategy, I was under the assumption I would have to rent these trailers for a max of $800 and I would have to only go in communities that no lot rent. Fortunately, I was told by several current trailer renters that they pay in the ranges of $1200-$1400. These tenants work mostly have laboring jobs and or cannot qualify at nearby apartment complexes. Thus with lot rent, capX, and related expenses I feel that I could strive for the $1300. As you said, at the beginning of your mobile home renting journey you had lower standards for individuals in order to get cash flow. I will strive to be a little less and or right at the same point of local apartment complexes. One huge advantage I would have market to my potential tenants would be they have neighbors on top or under them. I will surely ensure the park I intend to buy into allows subleasing if not I will need other funding support to purchase these trailers. I agree, I will surely test out my method on myself; the borrow from online funding group. More traditional funding ie banks, would not dare lend money without having something attached to the loan. One firm online quoted me at $176 per month for 10k, once qualified. Once I proof my method works and pay back at least one relative I am sure I will have to stop answering my phone because everyone will call. I would say one thing my relatives can say about me is, I am responsible and trustworthy. Yes I will ask 20-30 relatives and ideally without knowing their credit worthiness I am sure only half of them will qualify with these lending institutions. I have a 401k that will allow me to assure them there is a exit strategy and I will get a notarized letter and or a contract drawn up. I agree allowing the mobile homes to pay for the expenses and the acquisition however, the sellers may only do the deals if I give them upfront money. Currently, there is one investors selling 10 trailers in one park where the lot rent is $600. When you say underwriting situations that might come up what are you referring to? While this is all legal, I will strictly do this with relatives, I will not need any underwriting besides the online lender qualifying the relatives. My current exit strategy is to sell the trailer for the current rate and pay off my debtors. My ambitious spirit speaks to me every day and can’t understand why I wake every morning making someone else rich (my 9-5). If you have any additional advice and or suggestions please keep them coming. I'm also honored you took the time to give me feedback. I heard all you podcasts and I frequently go to your traveling website. Take care and I look forward to hearing from you soon. Regards,
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  • Duriel Taylor
    OP
    Realtor · FL · Member since 2013 · 372 posts · 83 votes
    10y
    Rachel H. Thank you for your prompt feedback. I have a great contact that owns her own insurance company. She always insures my properties with the best rates. If you have additional input and or suggestions please keep them coming. Take care and enjoy your day. Regards,
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  • Duriel Taylor
    OP
    Realtor · FL · Member since 2013 · 372 posts · 83 votes
    10y
    Justin Jocewicz Thank you for your prompt feedback. I agree with you lot rent is the best way to go. However, that number will be higher than 20k plus that person(s) will not finance a deal based on the fact they under the value in owning land. I completely under the $1300 was a stretch but I was told by several people that's what they charge so I went with that number to see how much cash flow is possible. Once I create enough cash flow for a full year I will explore land/lot investment options. If you have any additional input and or advance please let me know. I look forward to eating from you soon. Take care and enjoy your day. Regards,
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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    10y

    It's nice to have a plan but you need to realise the hurdles you will face, finding the homes, finding a seller that is willing to finance, finding renters, maintaining the homes.

    You will be very hard pressed to actually find all the individuals necessary to complete one deal let alone multiple deals. There simply are not enough willing sellers and renters to work your numbers. Additionally you have not included any expenses for maintaining your properties. These can be very high for mobile homes and will probably eat up most of your cash flow. Carrying a vacancy with lot rents in the 6-700 range will also be very difficult if tenants are slow to find.

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  • Duriel Taylor
    OP
    Realtor · FL · Member since 2013 · 372 posts · 83 votes
    10y
    Greg S. Thank you for your feedback. I agree with you my plan has hurdles but the same could be said about Noah's ark. My will and desire for success will not allow me to see the hurdles. I am not naïve to the obstacles but I will try. Lastly, I will reconsider my numbers based on your suggestions. If you have any additional suggestions and or feedback please let me know. Enjoy your day. Regards,
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