Renter unsure if he should buy, advice appreciated

[Tim Franklin]

Background, About a year ago, I was laid off from a better paying job. Now I'm at a lower paying job and now living in a mobile home. The owner has asked me if I would like to buy the place. It's an older, single wide mobile home (but well maintained) on a acre lot, with a well. It was appraised at $55k. But I'm not sure if I can stay here long term due to limited job prospects. I've never bought a property so I'm very unsure what to do. Anyone with experience, I would appreciate your input.

[Jim Johnson]

I think price is only part of the terms... 55,000 with zero interest... low down payment, extended term...
People get caught up on the price, but you really need more info. If the seller will carry, the deal can still fly. You can lower the price, and pay a high interest rate and end up paying more for the property in the long run.
So... a couple of things. First- how old is the home? Can it be moved if you need to put it elsewhere? The big key here- is it post HUD- like 1977 and newer? Next- what are your exit options? You should really have several. One might be to split off the home and the land, another might be to rent the home and land, another might be... to sell the home, keep the land and charge space rent down the road.
*** just hit the link- 1978
I would value this deal as two separate parts- the home as one value, and the lot as another. So you might research just lots in the area and see what they sell for, average days on market etc... Do the same for the home. If this home was in Dallas TX, it could fetch $15,000 if you sold it on terms... in Lafayette Indiana, maybe $9,000. Real Estate is local, so look at some of the mobile home parks and see what the home is really worth... maybe craigslist as well... You want to know the cash, and financed value.

So one last thing. How to talk to the owner of the land. I always start by trying to figure out why they are selling. That might give you a clue to how a deal can be structured. If they need lots of cash flow, lower the price and dump the interest. Remember, there are laws surrounding lending money these days, and that argument could lean in your favor. If they are selling this as a investment, and it seems that is the way they are marketing it, value it as such.
Take the income, subtract vacancy (say 10%), subtract the expenses and you have net operating income.
So... 550 x 12 = 6600
6600 x .9 = 5940

expenses... so repairs, water, sewer bills etc... and you need to know what the taxes are on the home and the land- and how they are trending... if the land is valued lower now, it will value higher once you buy the property. Now you have a tax hike you better figure in... say expenses are- 25%.
5940 x .75 = 4455
So what is a good CAP in your area... for a single-wide MH on an acre lot... maybe 11? 12?
11 CAP- 4455 / .11 = 40,500
12 CAP- 4455 / .12 = 37,125

Anyway... I would say, if your going to move from the area- do not buy a single mobile home to rent or sell. So walk if you think your going to move- or just keep renting...

If your going to remain in the area... like your wife's whole family is living there, and you will be sleeping with the dog on the sofa if you move her to Colorado... therefore your most likely going to stay in the area... take that closer look.

Good luck to ya...