Mobile home in a park buy, what is the norm?

Question

So I looked at/ and am wanting to pull the trigger on a deal in the near future/tomorrow. I don't want to make a dumb decision either. So maybe some advice. The home is in a park near to where i live. the location is good. its a late 70 model so its old and needs to be fixed up. I kind of told myself that 3000 was the max considering the year and age, but at the same time, from what i have seen the only thing you can get in that range has to be moved, and cant be lived in as is. This ,however, could be if i had to. I would need paint, floors, and some more basics. Also, i need to replace the hot water heater and buy a window unit or two. Other than that its a small 2/1 place. I "made friends" with the park manager, and he is really easy to talk to and offered to reduce the lot rent (which recently went up, and is little high) So i was looking to buy, and flip it, or rent, or rent to own if the right person asked. My question is, whats a good buy price. the owner now seems to have a lot of interest at 6500, but i just think that because of the work needed that i need it cheapier. however, even if i just rented it. here is some fast basic numbers.

lot rent: 300

could rent for: 600

Thats 300 a month, and 3600 a year. no maybe not the ideal price. but for less than 10k still not bad. I don't know, i just feel that for less money the homes need to be moved and everything else i have seen is 10k +. I was in a hurry typing this before getting to work, so sorry in advance. Let me know thoughts... Thanks, Will

John Arendsen · Answer

So as I see it, "its a late '70's model so its old and needs to be fixed up." It will probably have to go through something like the photo below. Right?:Fogidboutit. Go to the top of the highest mountain and yell to the top of your lungs...............................N E X T!!

Rachel H. · Answer

The first thing you need to do is figure out the numbers of what the home will sell for (i.e. cash, payments, etc), rents and what people are willing to pay for a monthly payment and move-in fee. You can get most of this information from the park manager, local residents in the park, other nearby communities and sometimes from mobile home dealerships. Once you figure out the numbers on the selling and/or renting side, then you'll have to figure in your time and how much it'll cost to repair the home. If there are a lot of repairs to be done, you need to know what you're getting into especially if you're doing the work yourself. If you decide to hire the fix-up work out, make sure you account for everything that needs to be fixed up and exactly how much you have to pay each contractor. Hopefully, you can check everything with power and water on before purchasing the home. Aside from the numbers and the fix-up work involved, you'll have to know the demand in the area. What are people looking for in terms of a home? How many bedrooms and bathrooms do they prefer? Is central heat and air conditioning the norm? Or are window units OK? What type of clientele attracts that specific park? What is the income level and type of people you'll be working with? Does this park and the clientele it attracts fit your personality? Can you work with these people and in this community? How is the park late at night versus during the day? These are just a few questions to ask before purchasing a home in any community. Though it sounds cliche, location is very important. It's not all about numbers. It's about seeing if the community and the clientele you'll be working with is a good fit for you and your personality. Hope that helps. Good luck with the deal!

Thomas S. · Answer

You will not see any positive cash flow with rent at 600 and lot rent at 300. Your expenses on maintaining a old MH will eat up any money you make over the term. The reason park owners sell of POHs is because they do not make any money on the rental of the home and really only make money on the lot rent portion. Cheep is not necessarily a good investment. You will not have any positive cash flow on that property.

Account Closed · Answer

With mobile homes my criteria is to get ALL of my money out of it in less than one year. In your example the max price I would pay is $3600 less the cost of needed repairs. Keep this in mind, not many people that would live in a 70's mobile home in a park have a big wad of cash to buy a home with. Translation; there are few buyers available. In my market, 6500 would be a huge price for a 70's 2/1.

John Arendsen · Answer

Actually if you own the dirt and it has a well as opposed to city water I take that as a real plus.

William H. · Answer

Alright, So....To be clear I ideally wanted/would have bought this place, fixed it up, and resold it, Cash or for payments. It also would have been my first MH. So before asking my question I have read a few post and books, and other sites online (months before this "deal" or post) And i will agree 6-12 months, ALL of the original investment back, probably even 6 months, just because of the age of the home. I guess I was just ready to do something of a deal that I got blind sided from my own numbers, however, I will say that I determined that its really not worth the time, especially at the price. I told her that if she really wanted to sell today and that i could do $2000, maybe but not by much i can go up?But away from that deal I learned a lot from the park manager (not the owners) The manager was very polite and easy to talk to, and maybe I can find a way to make some money in the park in the future. This park doesn't look that great at all (to me anyway) and nothing really is included in the lot rent which recently went up to $375. It's owned by some investors who just put it some nicer newer homes but other than that all of the lots are metered, and trash and grass so everything else is on the tenants, so no yard of the month awards this month. BUT the location is pretty good, its 10 mins to Downtown, and maybe 20 mins to the beach, and from what i am told (manager) its the most desirable park in the area. Keep in mind there are not many parks around here, and the one closest i can think of is not in a good area for kids (school wise) and the others are owned and managed by a realty group that sells/rents them also, so i assumed not a good place to try to start out. All of that being said after talking to the manager, he told me about some sales and numbers on some stuff that he has going in the park, he also said that he'd lock me in at $285 on the lot rent ( that is why i said $300 before). He also has a MH two lots from the one i was looking at that needs everything and its a 70's model also with some add on the side, basically he owns it now after it was left there, and he just through out a number of $6,000, which i am sure is not firm, and is not near a nice looking as the first one i was looking at. However, the owners want it nice, and occupied so they will lock in a lot rent of $99 for 2 years if I/someone takes it over. So thats a nice break, but again would need to be cheaper, and on payments, I think we can all agree. But one thing this park does have is a manager and owner that doesn't mind working with someone that is only looking to invest and not live in the park. Resale, so just this guys numbers, and they seemed legit....a 2/1 would resale for 8k easy 10k-12k if nice and could sit on for a minute (his words). He also shared some numbers on what he had sold in the park, and 80's model for 12,000 (600/m) and 92 for 16,000 (700/m and this guy pays more each month) and a 99 model for 20,000 (700/m).So i don't know but it just seems like, considering the price of the lot rent, and the age of the homes, and the money to get them to these selling numbers its just not worth it? maybe I am wrong, but this guy and others in the park are buying and renting them and i guess enjoy that. Personally I like payments, so that the tenant owns and takes care of the place and i'm not the landlord for a few bucks a month.Moving forward, and I will dig into other post, but what is a good rule of thumb for buying land and putting a newer used MH on it, or one with a home already, and just selling the home and keeping the land and doing a lot rent there? I have seen that done and I have seen people advise that (when buying parks) to go with the ones on city water, not well. Is that the same for if i just owned some land that had a well and septic in place? Sorry i'm all over the place, it is just easy to read online and another thing on the ground, Thanks for the help!

Marc Faulkner · Answer

I would not mess with it as it is too old to move to another location and this limits your options. Also-by the time you rehab it, you will most likely have more money into it than what it's worth. Also-this is a two bed, one bath home which someone already mentioned will lower selling options to people that can live with a home that small.

William H. · Answer

I agree with both of you. I wanted to rent to own ideally. But i was looking at just if i rented it the return on cash even at 6500 was good. Im in Savannah GA and its safe to say that 2/1 homes nearby or even some apartments go for 600 to 700. Im just going off the 600 number. The park manager owns a few and has been selling off what he owns, owner financing them to tenant's he's been renting too. Hes also Again ive always read and thought that 6 to 12 month's to get the original investment back was most ideal. But didnt know if that was what people were actually getting. Again ive seen people on craigslist "asking" for crazy numbers for old homes to move them off of land they purchased. Or last week on the same park they had three older ones that needed electric before it could be occupied and still were asking 2500 and 3500. I called about a week later to check, they had sold. I couldnt believe it. Then same thing with 10 and 12k homes that were old. I guess maybe because there is not many mobile homes in the area. Idk

Bill Ayers · Answer

1. Where is located?2. What is the market rent for a 2/1 apartment in the area?Also I never rent out mobile homes! They are too easily destroyed. I owner finance.