Good cash flow deal-but it’s a manufactured home! Advice needed

[Douglas Middleton]

Hi BP friends, I need some advice

So...here are the numbers on a 3/2 on 1.2 acres of land in a very pretty wooded area of Wake Forest NC, that I am evaluating to make an offer on as rental property. 

Purchase price $110,000. ARV is about $120,000. Down payment is $22,000 and I only need to put in a couple thousand dollars for minor repairs and updating. The monthly expenses all inclusive with house payment (PITI) is $807.35 on a 30 year note. Monthly rental income is about $1,400.00. My total cash outlay is $28,000. All told this gives me $592.00 monthly CASHFLOW after all expenses and 25% cash on cash ROI. Sounds amazing right? Here's the wrinkle that's giving me fits, it's a 1989 manufactured home (in very good shape) that has been put on a solid brick and mortar foundation. It feels and looks like a full on stick home. I've actually never seen this configuration before where a manufactured home is affixed to a "real" foundation! It's tripping me up a bit because I'm not clear on how this config performs over the long term. Is it more like a stick home or is it more limited from a value and appreciation perspective typical of a manufactured/mobile home type? Anybody have experience with this type of thing?

Normally I would never consider buying a manu home because of the potential for long term degradation in value and limitations placed on them by lenders.  My rental acquisitions are genuine buy and holds until the day I decide to sell them when I’m very old and gray, so again just another reason manu homes don’t bode well for me. BUT this is such a strong cash flow-er in a good area on an acre of land at a great price and the strong foundation to boot...What would you do?  Would I be crazy to pass this up?

[Thomas S.]

The rent is a good amount based on your investment however your cash flow numbers are all wrong. There is no way after all expenses are factored in long term that you will see more than  $200 per month positive cash flow. Manufactured homes require considerably more maintenance and upkeep due to their construction.