How can I make this Lonnie deal work??

Question

My friend found a guy selling his double wide for $15k. He got him to bring it down to $7500, then to $3000, then he even said he'd be willing to take $100 a month...he just wants to move. Only negative is that the lot rent is $1400. (Ouch right? Santa Clara is a lot...where I live in Hayward it was 450-600 per month) I'm really considering getting it myself but I'm worried if I can't sell it then I can't afford lot rent payments. What do you think? I believe this guy is a real motivated seller.

If I could structure a security deposit (some legal form where he promises not to sell to anyone else for $100 bucks) and then maybe I could find a buyer on craigslist or the penny saver for $15k or something. What do you think??? I need help!

This could be my first deal but I don't want it to slip away. After looking at 5 mobile home parks, nobody was as motivated as this guy was.

Marc Faulkner · Answer

I actually liked your idea of locking the home up and trying to sell before you buy!  It's free to run an ad on Craigslist and cheap to place an ad in the local paper and put a for sale sign on the home.  What does a comparable sized apartment rent for in the area?  If it is well under $1,400 a month then you have some room in this deal in my opinion, you just have to make sure the payments you are selling at are higher than what you are buying at so you have some spread.  $1,400 a month sounds super high to me but, I am in Michigan.  I am certain that your rents are much higher in your area than they are here.  
     My initial thought on this one would be to find someone that has $3k down and carry back a note for the balance.  The ad would read something like this:  By Owner Will Finance / No Banks / Low Monthly:  Clean X br manufactured home in clean safe community-Only $3k down and $1,800 a month.  With this figure you are passing on the lot rent to the buyer each month and pocketing an extra $400 for yourslef with 0 out of pocket on your part.  This would work assuming your local rents are slightly higher than  the $1,800 pr month you are looking for.

Randal McLeaird · Answer

This is a slightly more involved strategy but one my buddy uses here in Texas.

In San Antonio, or the outer counties, if you follow the properties that pop up on the tax auctions - you might come across a vacant lot here or there that the owner just never paid taxes on. If you research the lot and find it has utilities, you can find some great deals.

You'd have to be sure there were no deed restrictions and you'd need ot be aware of the reclaimation period in your area but...you could buy a mobile home like the one you mention in your deal and move it to the vacant lot.

Again, in Texas, you can acquire a lot for a couple thousand - a mobile home for the same - and pay to have it moved - you'd be in the deal for $5 or $6k and could then rent it out until the reclaimation period was over. After that - seller finance or just keep renting.

Again, this is more involved and requires the cash to aquire. But, if you're shopping for mobile homes - you might want to look at this as an option.

Good luck

J Scott · Answer

I moved from Santa Clara about 2 years ago, and back then, average 3/2 apartments were running anywhere from $1800-3200, depending on amenities (I know, it's a big range, but CA housing prices run the gamut).

If that's still the case, $1400 for lot rent may not be ridiculous, especially if the home is in good condition and in a nice park.

That said, I don't know if the rates have changed one way or the other since then...

Peter Haymond · Answer

It does a lot Rachel thank you! I love reading your blog and I'm going to stay in contact with you from now on. Thanks for your support!

Rachel H. · Answer

Yes, if you're not prepared to hold due to the holding costs associated with the deal ($1400/month for lot rent is quite a large sum!) then your best bet would to bring in a buyer who can. It's best to work with someone already doing deals and/or is familiar with the area. Or better yet, someone familiar with the park. Another route is to sell it to the park too (if you have a good relationship already with them). Hope that helps!

Leslie A. · Answer

Sure.  My email is in my signature.

Peter Haymond · Answer

Leslie I totally agree with you. 
          
          Usually the lot rent is 400-700 on average. It's really high to pay 1400 and I think I'm going to pass on this. Could I ask you a few questions by email? My email is [REMOVED]

Leslie A. · Answer

Peter, 
I live in Texas and around here it's more like $3,000 to move a doublewide.  
What is the total per month going rate for homes like this (including lot rent) in that area?  Is it high enough to pay lot rent and for you to make several hundred a month?  If not, this won't work.
To consider this one, you would need an agreement (probably in writing) with the mobile home park owner that you wouldn't owe any lot rent during months the home is unoccupied.  They should be open to this, since it's in their best interest to have the home sold and bringing in lot rent.  No way do you want to be responsible for that amount of lot rent.

Uwe S. · Answer

Not worth, fact.
          
          -Uwe

p.s. Okay maybe with only $3,000 price but you need a free lot to place MH for a while.

Peter Haymond · Answer

Yeah I heard a quote that to move a double wide like that it'll cost $1400 or so. I'm not sure if that's worth it or not.

How can I make this Lonnie deal work??

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