Good deal? Please weigh in, I need your input!

[Ashley Wolfe]

This may be my first deal so I'm going to give you some of the details.  I'd love to know what you think.

I called about a mobile home I saw for sale on Zillow.  In talking to the mobile home community manager, she told me that the home I was calling about had sold just today but there were some other ones that she new the owners were wanting to sell.

One home is a double-wide 3/2 for $17,500 and is not on the market.

The other home is a single-wide 2/1 for $4,000 with ~$600 owed in back taxes with no lien, needing a new AC (and I'm in Texas so that's a big deal), plus other updates.  Its basically the ugliest home on the block.

The updated double-wide I called about that sold for $35,000 is caddy corner to this $4,000 home.

The manager told me that comps in the same community rent out for ~$750-$850/month with a $405/month lot rent included in that estimate.

The community looked very nice, its in a nice part of town and the manager spoke very highly of her residents.

Here are my current options, as I see them:

1) Wholesale to an investor

2) Buy, rehab, sell (we're open to seller financing)

3) Buy, rehab, rent (our least favorite option)

I think that the wholesaling option would be the easiest for me because this is my first deal.  I really do want to see this home rehabbed though.  I hesitate because I don't know how excited an investor/rehabber would be about a mobile home, but I don't know until I ask.

In my negotiations, my MAO would be $3,400 to start because of the $600 in taxes due. I know this home needs lots of work and I haven't been inside. So I don't really know how to even begin to estimate the repairs needed. However, if the rent is projected to be $750/month minus $405/month lot rent that would equal $345. This would give me a projected ARV of anywhere from $20,000 to $25,000. So, the profit margin seems to be pretty good. However, we would still owe $405 each month, regardless of owning the home outright. That's a lot of overhead for my family but we could pull it off.

I have my script ready for when I call the seller (who speaks only Spanish by the way, but I have a friend who is ready and willing to make the call and take notes for me).

What are your thoughts?  Am I going about this deal the right way?  Is there anything I'm missing or not privy to?

[Bill Neves]

@Ashley Wolfe

Hi

If I read right, you are talking about the $4k unit?

That is their asking price. Not written in stone.

We like to look at a place, explain that we are not going to live in it. So $4k would be great for a family to buy and move in. We will be fixing anything needed and paying rent and utilities so may have 6 months holding costs before we sell. Is it 6 months? No but it could be so that's the contingency plan. Then if it needs the work you say, it might be a $1000 offer... maybe! Sometimes $1000 is too much if it's in bad shape.

Plus with $600 back taxes, what maintenance has been deferred? Like floors, plumbing, roof, etc.

Also, a single wide 2/1 is harder to sell than a double wide 3/2. You might be better off talking to the 3/2 seller and see where they are and what you could do with that.

Any of your 3 scenarios to acquire are sound.

Just my 2 cents.

Have fun!