Is it to good to be true?

Question

Hi all, my first post here. I found a 1 acre property with 2 trailers on them, 1 is a 1970 and the other is a 1995. Both clean and good condition. 1 brings in 350 and the other 375. He's wanting 25000.00 OBO Its out in the country and a small town. Both are rented. Does that seem to cheap for something like this? (small town in western KY).

Thanks for your input!

Bob

Thanks for your input!

Bob

Clint Dorris · Answer

I'm in rural Western Tennessee, and I don't know much about Western Kentucky, except the rural areas probably aren't much different than here.

Here, you can buy old trailers on 1 acre for that price all day.  You can buy 1 acre in the country for $5000 to $10000 easy.  You could buy trailers for $5000-$10000 easy.  So, to me, it may not be that great of a deal.  I'd investigate what you can get other trailers for. Financing for trailers is extremely difficult, and that has driven the prices way down b/c its mostly investors or cash buyers, except in new, nice homes.

Also, $18,000 for a 1/4 acre sounds high.  I'm sure that or higher in subdivisions happens all day long.  But in the country, you can often get 5 acres for the price of 1/2 acre in a subdivision.

The income numbers seem to work, but there may be better or similar deals out there. Again, I'm not in KY, but in a similar rural area.

Bob Bron · Answer

Thanks all for the advise.  Also a little about my goals (this is going to be like voodoo  of what a "real estate investor" is by regular standards). Id like to buy 100% but I dont have enough yet so id finance just to get the ball rolling then pay off as fast as I can. Id like to use this as an income property. I see land ( in a development near buy) going around 18000 for a 1/4 an acre (without the land I wouldn't consider it). Septic tanks? I don't know ill have to ask.  Tenants? What is the best way to check? How do I know its not the owners family and their not going to move out as soon as its sold? Population is very low but there are many city's within 5 miles. ( yes I did mean 5 miles ) seems crazy but its true.

Harold Anderson · Answer

For a buy and hold, it sounds great as long as you can rent it.  For a flip, how would you do it?  Offering seller financing could do well for you.  To sell w/o financing, I'd need to know much more.

For the purchase, ask the seller to finance it.

What about location?  Is it near a town or city?  Are they SW and what SF?  Can the rents be increased?  You say they're in great condition.  Can they be improved to increase revenue?  Can the land be used for other income generation?

Guy Gimenez · Answer

A 1970 mobile home has no value from a traditional lender's perspective and a 1995 man. home, depending on condition, might be not be outside the high four to very low five figure price range. From an investor's perspective, their ability to produce income will qualify them more than their intrinsic value. What is the value of the land? Is there one or two septics on the property? What is their condition?

There are too many missing parts to this equation at this point but it sounds like more investigation is at least warranted.

Elizabeth Colegrove · Answer

Just be careful about financing. I have seen a few posts on here about trailers older than 1978 being hard to finance. Also check the tenants and make sure they are paying on time, will stay, and they are the people you want to deal with. If you can' tget tenants than no matter how cheap isn't cheap enough :)

Rick Pozos · Answer

Sounds like a deal to me. I would talk with the seller and find out his/her motivation. If they do not NEED the cash right now, ask if they will owner finance with a small down payment. Otherwise, you can get a contract and wholesale it to someone else. If you have the cash, it would be a great cash flow property.