Can I compete with parks when they are offering financing?

Question

I've been bitten by the mobile home investing bug and would like to get started. The types of homes I'm interested in are those that can be purchased in the $5k and under range and be sold over the next 3-5 years at a significant profit. F.S.B.O. Inventories seem rather low, almost non-existent.

I've been studying the markets in my area but several mobile homes for sale appear to be for sale by parks who will finance themselves. If parks are willing to finance properties themselves, is there still a decent market in markets like this to be able to make mobile home deals on contract?

John Fedro · Answer

Hi Jeffrey,Thank you for reaching out and connecting. Additionally, thank you for your detailed messages as a certainly does help me try to answer your question a point you in the right direction moving forward. Please see my thoughts below in bold. I've included both of the previous messages in this one reply.I have been watching some of your mobile home fix and flip videos on youtube and if you don't mind I was hoping to get your thoughts on a couple questions. Thank you for watching some of these. I do hope that they have been somewhat helpful to thus far. I'm looking to purchase a 197(?)3 2/1 single wide that's being offered from a park management company, they're asking $4000, although when I went in to talk to them it was take it or leave it price is firm. I've been through a lot of homes from the 1970s, some of them look amazingly well taken care of and others look like complete nightmares. Additionally, the size of the mobile home will matter is a larger home will typically attract more potential buyers. The area and other factors obviously matter as well. The home is far from move in ready, I'm in construction and after looking it over and putting some numbers together I figured $5-6K to reno with me doing the majority of the work. Comps in the Boise ID area would be around $15K, so with material and labor it does'nt seem like there's much meat left on the bone. It sounds like you would be wanting to resell the home to an all-cash type of buyer if possible. Good job finding these comparable sales and understanding one exit strategy. Even when selling it for cash it sounds like it will be profitable at least a little bit. With that said I would agree with you that we are not in this business to make a few hundred dollars here and there, but rather a significant income moving forward.My thought on mobile home re-selling is that it would be hard for someone to come up with or get bank financing (especialy in a park) especially in a part of the country where income wage is low. What are your thoughts about owner carry or lease to buy with a solid down payment, something close to paying off the purchase plus reno. The area that you are in is certainly growing and in demand. I'm certainly a very big fan of selling via payments when you are selling to the a low-risk tenant-buyer using correct procedures and paperwork. When selling on payments you will likely be able to sell the home for about 25% or more of your cash price. Whoever you may have to work with a tenant-buyer on the down payment and monthly payments depending on the park in the specific area of the city. Be careful when selling on payments as we can often make mistakes or sell to the wrong people which can cause you a good deal of headaches.I should have added that space rent in the parks that this co. ownes or manages is $525/mo. water, sewer, trash and 5yr contract. I was hoping to be able to work a deal with them on space rent for the first couple months but they don't sound like they're into dealing. Would dealing with management companies that won't work with you be a deal breaker for you? The fact that the park manager will allow you in the community to purchase and resell the home is "working with you". With that said some parks are more flexible than others with regards to the price or terms they will sell their homes for, as well as a number of other matters. Whenever I work with folks we try to focus on the path of least resistance in and around the local area. I mention this because while this opportunity does seem like it will make some money, it may not be the path of least resistance or most profit for your first or second MH deal in a park. I would encourage you to continue talking with more managers as well as many more sellers if possible. Keep up the great work. This business is definitely not easy or for the lazy. All the best. If you have any follow-up questions or concerns never hesitate to comment back for us all to help or email me directly.Talk soon, John

Jeffery R Stensland · Answer

I should have added that space rent in the parks that this co. ownes or manages is $525/mo. water, sewer, trash and 5yr contract. I was hoping to be able to work a deal with them on space rent for the first couple months but they don't sound like they're into dealing. Would dealing with management companies that won't work with you be a deal breaker for you?

Jeffery R Stensland · Answer

@John Fedro Thanks so much for the follow up, I appreciate all the info!Jeffery

Jeffery R Stensland · Answer

Hi @John FedroI have been watching some of your mobile home fix and flip videos on youtube and if you don't mind I was hoping to get your thoughts on a couple questions. I'm looking to purchase a 197(?)3 2/1 single wide that's being offered from a park management company, they're asking $4000, although when I went in to talk to them it was take it or leave it price is firm. The home is far from move in ready, I'm in construction and after looking it over and putting some numbers together I figured $5-6K to reno with me doing the majority of the work. Comps in the Boise ID area would be around $15K, so with material and labor it does'nt seem like there's much meat left on the bone.My thought on mobile home re-selling is that it would be hard for someone to come up with or get bank financing (especialy in a park) especially in a part of the country where income wage is low. What are your thoughts about owner carry or lease to buy with a solid down payment, something close to paying off the purchase plus reno.Thanks,Jeff

John Fedro · Answer

Hi Michel,Welcome to the site. This site has a lot of great information with regards to mobile homes and mobile home investing. In order to help answer some of your thoughts and questions please see my thoughts below in bold.I've been bitten by the mobile home investing bug and would like to get started. The types of homes I'm interested in are those that can be purchased in the $5k and under range and be sold over the next 3-5 years at a significant profit. F.S.B.O. Inventories seem rather low, almost non-existent. You have likely reached out to a number of parks and been searching online and off-line for mobile homes for sale. It is not uncommon to find a low number for sale under $10,000, $20,000, or $30,000 depending on your area. Additionally, the weeks of Christmas and New Year's will be exceptionally slow with more sellers and buyers coming into the market in the new year. You mentioned the types of homes and price ranges you are interested in, as you have alluded to this is easier said than done in most areas of the country. With that said mobile home sellers do need help and there are likely opportunities for you to move on if you know what you are doing and covering a large enough area. That answer is pretty vague however I hope it helps him and points you in the right direction.I've been studying the markets in my area but several mobile homes for sale appear to be for sale by parks who will finance themselves. If parks are willing to finance properties themselves, is there still a decent market in markets like this to be able to make mobile home deals on contract? The answer, like most in real estate is, "it depends". In some hotspot areas around the country some mobile home park owners have taken upon themselves to move in a new mobile homes and used mobile homes to sell or rent themselves. Additionally, they may repair and resell or rent some of the homes they received back for abandonment or eviction. Some of these parks will definitely wish to have you as free-help in the community, however they may not sell you any of the abandon or evicted homes. In this case you can still work with sellers and also potentially moving homes of your own depending on the situations. If the park is willing to work with you than the next step is to determine if they are selling a comparable home. This depends on what they are selling and what you are selling. If they are selling the exact same model mobile home as you for the same price and terms, they will definitely get their home filled before use fill your home. This may definitely not be a problem if the park is only selling one or two other very comparable mobile homes, however perhaps the park is selling five or 20 other mobile homes. Keep in mind that many times the homes the park is selling are not comparable to ours. They may be different ages, sizes, bedrooms, cash/terms, conditions, etc. There are definitely other things to watch out for however I hope this starts to answer your question about working with parks in these situations. Definitely do not sabotage yourself without going through the steps of reaching out to the park as best you can. Moving forward if you have any follow-up questions we are all happy and here to help. All the best. Talk soon, John