Buy and Hold Live in Rehab to Rent Later

[Stephanie Southerland]

Investment Info:

Mobile home buy & hold investment in Safford.

Purchase price: $25,000
Cash invested: $28,000

This is actually a manufactured home on a lot, that we also own. Permanently affixed and ground set. Was originally a single wide, (1984), that the original owners added on about 900 square feet, on a concrete slab. The home is now 1856 square feet, 3 bedroom, and 1 and 3/4 bath, with a large carport and workshop added on as well. We bought this home to live in until we find another to move into and fix up. The kitchen had already been redone, so that expense was deleted, all we had to do was paint, and we've installed new carpet, and so far, new flooring and a new shower surround in the master bath. We could rent this home out for 1100-1200 per month, so we are avidly seeking our next livable rehab with a bit of a bigger yard. We will add some new trim and do a bit more painting and coat the roof upon moving out, and will have minimum cash in this deal. The value of this home now is about 85K, considering that it is an older manufactured (even though it looks great inside), and the neighborhood isn't the very best, but we also have had no issues here with any of the neighbors. It is all manufactured homes, and some of them are a bit run down, not helping the ARV, but the rents are amazing, due to the copper mines in the area, and the lack of housing available to rent.

What made you interested in investing in this type of deal?

Saw an opportunity to capitalize on our cash

How did you find this deal and how did you negotiate it?

Driving for dollars and Deal Machine. The seller called me, and turned out I knew her from several years ago. It was her parents home, and the neighborhood was originally a retirement type of area. They had both passed away several years back, and her and her sisters had rented it out, and also seller financed it previously, and had to foreclose. They were just tired of dealing with it and didn't have the time. I asked her what she thought they'd like to get out of it...

How did you finance this deal?

Cash from the out of state flip that we had just closed on.

How did you add value to the deal?

We have painted, new carpet, and bathroom flooring, will be adding some other touches upon move out before renting out.

What was the outcome?

It's actually a very comfortable home, and we are excited to move on and get it rented out, as soon as we find another that we can move into. We were able to take out a loan on it, with my dad, at 10%, interest only, towards the purchase of another property and rehab costs.... which will be refinanced in 6 months into a conventional. (on the new rental property), and we will pay him off with that, and will have enough towards another property.

Lessons learned? Challenges?

I cannot think of any negatives yet!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We are Real Estate Professionals :)