Mobile home strategy.. Can someone please verify / give opnion

[Danny Day]

I've been looking at the mobile home RE strategy. From what I've read on here the best play is to buy low ($2-3k per mobile home), rent ready rehab and sell to make $2-3k margin.

You then lease the lot the mobile home is on for $200-300 per month.

So if you had 2 acres, and put down 20 homes at $200 per month, that would gross $4,000 per month ($48,000 per year). Plus an average profit of $2,500 per home sale is $50,000.

Year 1 Costs include:
Development costs--
-Land purchase
-Land clear / stage
-Septic installs
-Electric installs
-Well drill

Housing costs-
-Mobile home purchases
-Property management fees

Land costs-
-Taxes

Year 2 Costs include:
-Property management fees
-Taxes

Year 3 Costs repeat year 2 and so on.

It seems like this might be better than rental properties..? Monthly cash flow without risk or major maintenance.

Can anyone verify that this is correct, or am I missing this entirely?

Thanks in advance

Danny

[James H.]

I've not thought about packing the trailers so tightly, but I guess it would be 0.1 acres per trailer which would be similar to a zero lot line for a stick built - so not unreasonable.

There will be 20 driveways to install. I would guess that would be roughly $10,000 for gravel surfaced.

20 electric meters I'm guessing 300 a piece for $6000.

Now, I understand Greg B. said you can probably only install one septic per acre. I have no idea, and he's probably right. But in trying to extrapolate the cost of the septic, lets use $5000 per trailer. (that's about how much a septic tank costs - so one larger system might be in the ballpark of the sum of individuals- huge assumption) So, that would be about $100,000.

Water meters vary by county, but I've seen them for as low as 2500 up to 8500. Lets assume 3000 in this case. That would be $60,000.

So in all, the development costs would be around $175,000, all of which would probably have to be cash or privately funded.

Also, you have the cost of the land. If you are going to pack 20 mobiles together like that, it will have to be pretty close or actually in town to appeal to the person who would choose such a living condition - just an assumption. But all my assumptions above were loosely based on county set up (gravel roads, water meters, no civil design for drainage, etc.). Good land close in yet still in the count could easily run 20K per acre, so there you have another $40,000.

So far I'm up to $215,000 and I'm, probably under what it would actually come out to be. Still, 4,000/month is a pretty good return on 215,000. Plus you'd probably have a lot of plays on the actual mobiles as well. I guess the real question is: Do you want to own a trailer park for a quarter million dollars, or do you want to do other things? I would think you'd be spending a lot of time on that project or would have to pay somebody to do it for you, both of which make it somewhat less appealing, but not necessarily a deal breaker...