Joshua Tree deal analyses

[Sandy Hu]

The deal involves 2 properties on one lot. Both properties are in Joshua Tree area and run as AirBnb.

Property 1: this is the main house on the lot. Last full year gross is 72k.

Property 2: the original owner put another mobil home on the same lot. The mobile home has it’s own airbnb listing. The gross for last year is 75k

After all utilities, tax, insurance & maintenance, the net is 80k.

The owner is selling both for 450k.

The main house can only be appraised for 250k. So this deal is actually 2 transactions. 250k for the main house, and 200k for the mobil home.My concern is the exit plan. When I sell it in the future, it can be challenging. looks like the numbers make sense from a business standpoint, but after all, it’s a real estate transactions.

Any opinion is appreciated!

[Rob Johnson]

Hey Sandy,

Congrats on the pending purchase! I own two Joshua Tree Airbnbs myself and have been happy with their performance. As you may have discovered purchasing a mobile home is potentially problematic. First, you'll need to do some due diligence on the County's pending short-term rental laws. It's not clear whether non-permanent structures like mobile homes (e.g. airstream trailers) will be granted permits. 

If you do intend to sell the parcel with the mobile home as part of the transaction there's also some potential that a buyer's bank wouldn't agree to finance that purchase or assign a very high value to the structure.