Just purchased first my first manufactured home

[Troy Bevans]

I managed to purchase a 1982 3 bedroom / 1 bathroom (with jacuzzi tub) home, with all working appliances, w/d, furnace, updated water heater, very large shed, and some updated flooring for 2K. My initial intent was to do some simple painting and add some Allure Ultra flooring from Home Depot, nice white base molding, and then list it on the market as a Seller Financed home. Although, I have also been considering turning it into a rental property.

One of my concerns about renting the MH is that it is a depreciating asset, even though I paid a considerably low amount for a well taken care of MH. The MH park will allow me to rent out the property, which my rental rate would cover the lot rent expense, and I would hold the responsibility of paying that each month. Another concern is the city rental laws and how they would apply to the MH. And of course, a major concern is a focus on the tenants and issues that could stem from renting.

Out of a need to assist my brain with a good decision, would you rent or seller finance this MH? I have 5 single family homes I rent out now, but this is my first attempt at the MH market...I blame and thank John Fedro for being so amazingly AWESOME : )

[John Fedro]

Hi @Troy Bevans

Congratulations on this investment purchase! A 3/1 for $2,000 is a wonderful price, especially in good condition. You did a great job purchasing from your description of the home.

Now you have the choice to rent or sell. Very cool that this park gives you the option to rent, few do. Currently you have a fine-little-home that sounds desirable and will be a great income producing property. My advice is to sell and not rent.

Stick to renting SFRs as you already do. Mobile homes can become damaged much more quickly than SFRs from water and neglect. It is for this reason to sell the home versus renting. A buyer that is making you payments to own this home will be much more responsible with your high ROI asset.

In addition after you rent you will still have to resell to someone else. If the renter has not taken god care of the home you will have to sell for a very discounted price. If you do rent make sure to have you or your handyman walk through the home monthly to verify repairs and conditions.

Do not concern yourself with the appraised value of the home. As investors we only care about the home's blue-book value when getting it insured or refinanced. You are not alone in thinking that mobile homes depreciate - they do, however you are selling a nice quality home to a buyer that will be over-joyed to be making you average rent payments to soon own a home of their own after 3-7 years. In other words the way you are selling makes this $2,000 home a highly wanted property.

I would not mind looking over pictures of the home if you email them to me. From your description a payment sales price of $12,000-$20,000 should not be out of the question depending on repairs needed at the time of sale. Also location is important too.

Thanks for the awesome kudos!! It is you that had the guts and strength to contact this seller and help them out. Now it is you that will hopefully be a local MH expert in your area as you do more and more deals. :)

@Larry Roberts you are correct about lease options. In some areas they are not legal, however in most areas they are so know your state laws about LOs. If the park allows you to rent anyway than a lease option can be a good strategy here. It is best to not "get around" laws but rather to know what these laws are and do not fall within the scopes of their jurisdiction. With that said the lease option in this case would work. In other parks you will have to use an alternative startegy to sell for payments and a move-in fee. Also I always aim for, and teach other investors to not settle for less than $300 per month cash-flow minimum unless unforeseen obstacles occur. Just making sure you aren't leaving money on the table.

Let us all know what happens!

All the best and congratulations again.

Talk soon,

John Fedro