I purchased an old manufactured home on owned land and removed it. Then I replaced it with a brand new home and sold it. I did not make a lot of money and it took way too long but I learned a lot and didn't lose money at least. I did this all with a custom construction loan. Financing ate me alive.

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

I was a brand new real estate broker and I spotted this "cheap" property. I didn't really know what I was going to do with it but I went out and took a look anyhow. I worked the numbers for rehabbing the place and renting it out. Then I worked the numbers for rehabbing and flipping. Finally, I worked the numbers to remove and replace the home. In the end, the mobile was too old and nasty to rehab. I just went for the "easy" solution and replaced it.

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

I found this deal on the MLS. I think I paid full price because I wasn't the only one who found it. At the time though, no one cared the least bit about mobile homes or this neighborhood so it was not nearly as competitive as the surrounding area.

How did you finance this deal?

I used a convertible custom construction loan. I purchased the property as a land loan, then it converted to construction when I started my work. After that, it would have converted to permanent financing as a non-owner occupied investment property loan. It was a neat product. I threw away the term sheet a long time ago though so I don't remember what the payments were like.

How did you add value to the deal?

Mobile homes built before July 15th, 1976 are essentially unfinanciable. By replacing it with a brand new home, I was able to sell it to anyone who could come up with 3% down for an FHA loan (Yes, FHA was 3% back then).

What was the outcome?

The outcome was that I walked away at 25 years old having completed my first real estate investment, gained a ton of experience, and increased my net worth by $10,000. Not too shabby.

Lessons learned? Challenges?

I learned to do everything possible to communicate and be friendly with the neighbors. Neighbors can either bring you water when it's hot, let you use their power when you need to, and let you cut branches off their trees with no complaints, or they can make your life a living hell. Also, I learned that the city, power company, and other utilities operate very much at their own pace and it has nothing to do with your needs or desires.

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

Almost everyone I worked with on this deal is out of business now. Not because of this deal but just because the industry typically has higher than average turnover. The bank is gone, the title company is gone, and the escrow company is gone.