HELP ANALYZE: Manufactured Homes Deal

[Andrew Bonar]

Hey BP,

I'm becoming familiar with manufactured homes and have come across a deal that grabs my attention. This would be an investment. I have not invested in these home types before so I would love some feedback on the deal. Preferably from investors who have experience with this niche, as I want to hear from those who really work with these types of properties. Below is a quick breakdown of the deal. I understand that manufactured homes do not appreciate the same as traditional homes. I would LOVE some valuable feedback!

- 5 identical units, average condition, all manufactured in 1997 and permanently connected to the land/foundation, land comes with the purchase, slanted roofs not flat, 690 sqft, 2 bed, 1 bath, living room, kitchen, double wide.
- Total price = $250,000 or $50,000 each. I'll attempt to negotiate the price closer to $150K, maybe even lower. Original price was $300k and seller dropped the price by 50K a month and half after it was listed, so I feel there is real room for negotiation. For calculations purpose let's use $200,000 as the negotiated purchase price. With taxes and insurance taken into account with mortgage, the total annual mortgage payment = about $16,500 for all properties combined.
- All units currently occupied with rents at $550/month or $33,000/yr
- Cash flow = $33,000 - $16,500 = $16,500

These seem like good cash flowing properties. They’ve been on the market for almost 3 months and I feel they’ve not sold yet because of the known unpopularity of manufactured homes and it being a niche. I think the seller got these for $11,000 each in 2013. So they paid roughly $60,000 for them, so you would think that gives room for negotiation, right? Ideally I would like to get this property for close to $100,000 and raise the rents to $650. Average rents in area are $750. This would be an investment for income, not so much appreciation, since these home types don’t generally appreciate much.

Please send me some insightful feedback BP!! Thanks!!!