[Calc Review] Help me analyze this deal

[Gary Millar]

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I am a new investor and need a little help looking at this deal. 4 mobile homes that cash flow and i'm a little nervous.

[John Fedro]

Hi Gary,

First things first, great job being proactive enough to evaluate this opportunity and be considering this potential opportunity in the first place.

Ryan, Matt, and Dennis bring up good points and give great advice above.

Let's discuss some things we know. If the property is in a high demand area around the Orlando Metro market then you should have no problem keeping this property filled with renters or tenant-buyers. I'm unsure of the exact location, age, or condition however four modular homes and a half acre of land may or may not be valued at around $300,000. Perhaps the seller is willing to consider financing because this property will be extremely difficult for bank approval or finding proper comps to support the price. Maybe this is a retail priced property on the MLS.

Keep in mind that renters can damage a manufactured home, modular home, or mobile home pretty quickly if they’re not taking care of things. I would encourage you to inspect these properties quarterly if possible. Even then expect yearly expenses to keep up with these rentals. 

I am curious what your end goal for this property is? Are you planning on holding this for a few years and intending to flip it for a profit? Or is this going to be a long-term buy-and-hold investment for the next 30 years? Keep in mind that these homes will depreciate and you will most likely have to replace them with newer models in the future at a good cost.

This certainly looks like it will be a profitable deal over time, however is that the best use of your $60,000, time, and credit? In my experience you will likely be able to purchase more than four separate mobile homes on four separate parcels of property for under $300,000 around your local area.

With all that said I certainly do not want to be a wet blanket. This is obviously an opportunity however if others have not jumped on it perhaps it is not the best deal out there. Perhaps you could negotiate the price down a bit or better terms. Let us know what you decide and keep us posted please. If you decide to move forward keep us in the loop and never hesitate to ask more questions. Keep up the good work. All the best.

Talk soon, John