Country Mobile Homes on acreage... Is there an Outlet?

[Dustin Davis]

All, 

@Henry Washington and I come across mobile homes on 1-5 acres pretty regularly. They are usually 15-20 minutes from town and in need of some repair... We can usually pick them up for what the land it worth or a little below. Example: 5 acres in a decent area 15 minutes from town, 5 minutes from lake,  with a mobile which needs $10K in repair can pick up for $35,000-$40,000. We are trying to find an outlet or an option for these that works... So far below is what we have come up with... 

1. Tear down and market land - It doesn't make sense  as there's a lot of risk (carrying costs) and very little payback.  

2. Rehab and rent - again doesn't make sense as $600 is top end for rent which could be OK but your pool of renters is very narrow. 

3. Assign it to someone who knows what to do with it??? 

I know this seems pretty broad but someone out there has had to have been through this same dilemma... Thoughts?

P.S. Please ask any clarifying questions, I'll answer to the best of my ability. 

Dustin

[Jeffrey H.]

I have done this a few times.

The exit strategy is fix up the mobile home and owner finance it.  But with your market rents so low you need to be careful how much you put into the home and land.  A singlewide on 1-2 acres given your market rents you need to be probably 30K all in, and could then sell for 50K on a note and collect interest.  A doublewide would give you better cushion, but still need to be around 40K in that scenario.  You'll want to escrow insurance and property taxes and try to get the payments around $650 total so that you're competitive in the market.  This means you're going to have to do some 12-15 year loans to get there (assuming a 5K down payment), and not sure if that meets your investment criteria.

I'd try to find properties a little closer to town where the rents are marginally higher in the $700+ range, but that's just me.  Good luck.