North Texas Landlords (and others)

[James H.]

Can you tell me what your experience has been like when investing in a mobile home on land?

Common sense tells me that the structure itself is a little less durable. What about the quality and sophistication of the tenants. I have a low income rental in the city which requires me to pick the rent up at the door as these people deal in cash. If I had a property some 40 to 60 miles out, I would rather collect rent via internet or snail mail.

How about the option to owner finance? I've read up on Lonnie deals, but since there is that impending lot rent, I don't think its for me. Plus it looks like most parks do their own Lonnie deals in house from what very limited market research I've conducted.

I would think that if you offer owner finance, you could really get a great return on a 20-30k investment. Those of you who have offered owner finance on mobiles with land; what kind of default rate would you expect.

If renting a 3/2 on 1/2 to 1 acre, what would your target rent be? If owner financing, what woud your target down payment and monthy payment be (principal and interest only).

What are any other things to consider?

[Jon Klaus]

Brian, I have a good number of mobile homes on land that I started buying in early 2009. The average rent is $927 a month. That's up over 6% from 2 years ago. My turnover in tenants has been higher than I would have liked, but I am getting stricter in my qualification, so turnover is dropping. I am currently all leased up.

Offering seller financing will make your phone ring off the hook, but beyond cash flow, my next goal is land banking. That is to buy land (that pays for itself) in the way of growth and hold for the long term. Therefore i don't like to offer financing. I like to keep them, or trade up.

Those that do offer financing and take a warm body with a down payment have high default rates. Glorified rentals. I'm sure many of these operators are violating the HUD SAFE act. Also there are many unqualified buyers in this arena.

I don't do Lonnie deals or work in parks, but am very familiar with them. It's not really real estate investing in the sense of what I want to do. I think it is a viable way to start out with little cash or credit, through. I tell everyone who is interested in this to read Lonnie Scruggs' Deals on Wheels. John Fedro is really strong at this, too.

All of my homes are on at least one acre. When I buy now, i am a lot pickier about location. i go for a good school district an a road that should see development. Corners are great. Interstate highway service roads are fantastic.

I prefer late model homes. Most of the HUDs that come up for auction are built between 1997-2008. Make sure you get the septic system checked before you buy. These homes are easy to repair and level. Make sure the foundation is FHA approved. Almost all of them have FHA foundations if they are from the HUD auction.

They will be a challenge for you to get financing as an investor. Your end buyer will have a tough time, too, but can get it done.

Difficult financing is the biggest reason they are so cheap. Most banks still won't touch them, but a few will. Virtually no bank did them 1-3 years ago.

Mobile homes on land is a good strategy in north Texas.