Deal Analysis: Manufactured Home in North Carolina (NC)

[Michael S.]

Hi all, this will be my 4th deal in 1 year and it is the first time I have posted. This will be my first manufactured home and I want to ensure I am not paying too much. My strategy is buy and hold. This will be a cash purchase. It is a recently rehabbed manufactured home on a cement foundation. There are similar homes around it. Its not a great area, but it is extremely close to the gate for the local military base in Jacksonville, NC. My biggest concern is that the house is a bit old. Everything seems in good shape from visual inspection, and the previous owner removed unsightly wood panneling, repainted, added new carpet and flooring and upgraded some plumbing. It has central air.

List Price: 49,900 (looking to negotiate closer to 45,000 with closing costs)

Monthly Rent: 700 ($50 below market rent to fill fast)

Vacancy: -70

Management: -70

Taxes: -37

Insurance: -59

HOA dues: -10

Maintenance: -100

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Monthly cash flow: $354

Annual cash flow: $4248

Cap Rate: 9.4%

Comps in the area for mobile homes are in the 30k-60k range. This owner purchased the home as a foreclosure in Jan 2012 for $25,000 and rehabbed it. This market is a little funky because it stayed flat in 2008-2011 because of strong military demand, then started to decline in 2011 because of force cuts.

Thanks for the input.