New member looking for advice on Mobile Homes

[Mark Hull]

Hello bigger pockets community!

I am a new member to this site although I have been utilizing it along with most of the podcasts for several months now. What an excellent community of like minded individuals. I am new to real estate investing and have not made my first purchase yet, outside of my primary residence. I reside in Fishers, Indiana which is just outside of Indianapolis. I am currently employed full time and have a wife and young son at home. I am super excited about my journey into real estate. So I have been tossing around several ideas over the last couple of months and think I have a direction I would like to pursue and would love feedback from anyone willing to do so.

My plan is to pay cash for land with a mobile home on it, do some slight repairs/renovations then sell the home with seller financing while still maintaining ownership of the lot. I am thinking that my main target would be REO properties that I could purchase for no more than 20k (including land/MBH/repairs), then try to achieve a $600 monthly payment (for both the home and land rent).From just looking around on a few sites, there seems to be no shortage of these in some of the rural areas in Indiana. I think I would be willing to go at least in a 50-75 mile radius from where I live to acquire these properties. A few issues that I am trying to think through are: What would be an appropriate lot rent for the land? I think my plan would be to take the $600, then back out the lot rent to obtain the payment on the MBH. Also, what is a fair rate to charge for seller financing? Would a $1,000 down payment seem about right for these types of property? And lastly, how do I know what to sell the home for? Since I will be purchasing both the home and the land together I am curious as to how to determine what the value of the land is vs. the value of the MBH.

Sorry this drug out a little longer than I liked, but I wanted to make sure I am covering all my bases.

Thanks and look forward to hearing from everyone!

[Mark Gruetzmacher]

@Mark Hull Hi Mark and welcome to BP.  It is such a great place for everything.  In your scenario there is a lot of different variables.  I think you should check out your area or the areas that you might be buying some of these homes in.  See what other mobiles homes are selling for, see what the lot rents are going for as well.  The lot rent price can vary a whole lot.  Along with lot rent , see what if it includes anything like garbage, water, sewer, etc.  That should give you an idea of the local market. 

If you are buying mobile homes on land, you need to see if it the mobile homes have titles or if they were given up and made part of the real estate/land.  That will affect you selling just the homes to an end buyer.  Some states I think you can get back the actually title to the mobile home and then you can sell it to someone.  As for a price to charge for the rent, I would again check the local market for rents and I would think you might be able to get a little higher price on your land because it appeals better to people because it is not in a park.

As for selling to the home to the a buyer on payments.  You are going to have to decide if you are going to comply with Dodd Frank and the Safe Act.  Some people will not worry about it and just sell on payments anyway.  But in any case it is something you should read about and check into if you have not done so already.  About the down payment, I think $1000 down might be a little low.  Around my area you can easily find people willing to give to $2-5K down.  To figure out the payment you would need to figure out how much you want for the actual home and see if some numbers work.  I would have to total price stay close to what the rents are in the area or maybe a little higher because they are buying the place.  If you go that route I would make sure the lot rent is totally separate from the house payment.  Have a separate lease agreement for the renting of the lot and then something for the actual home.

You might be able to look up the land values with the treasurer.  Also doing comps vs other parcels of land to come up with some value number.  I would sell the homes for what comparable ones in the area are going for.  There is a lot of variables to take into consideration.  Good Luck in your new venture.